How is a depository similar to a bank…

A Depository can be compared with a bank, which holds the funds for depositors. An analogy between a bank and a depository may be drawn as follows:

BANK

  • Holds funds in an account
  • Transfers funds between accounts on the instruction of the account holder
  • Facilitates transfers without having to handle money
  • Facilitates safekeeping of money.

DEPOSITORY

  • Hold securities in an account
  • Transfers securities between accounts on the instruction of the account holder.
  • Facilitates transfers of ownership without having to handle securities.
  • Facilitates safekeeping of shares.

Depositories in India :
There are two depositories in India which provide dematerialization of securities. The National Securities Depository Limited (NSDL) and Central Securities Depository Limited (CSDL).

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s