| Market players said that a lot of new investors were attracted by the Tata brand name and this resulted in a spate of new accounts being opened with depositories. |
| This was expected as the allotment is to be compulsorily made in the demat mode, as has been the case with most recent IPOs, they added. |
| Demat (short for dematerialisation) is a process wherein securities such as shares, debentures and gilts are converted from the 'material' (paper documents) into electronic data and stored in an electronic depository. |
| A depository is a securities bank, where dematerialised physical securities are held in custody, and from where they can be traded. This facilitates faster, risk-free and low-cost settlement, said industry analysts. |
| At present, there are two central depositories in India, the National Securities Depository (NSDL) and the Central Depository Services (CDSL). |
| NSDL has seen the number of active depository accounts with it surging 41 per cent in the last one year from 39 lakh as on July 31, 2003, to 55 lakh on August 6, 2004. Of these, more than 1.55 lakh new accounts have been added since July 1. |
| CDSL, the other central depository, has also seen new accounts growing more than 135 per cent in the last one year, from 3.1 lakh to 7.3 lakh accounts as on date. They added more than 60,000 accounts since July 1. |
| NSDL boasts of more than 90,674 million securities in its custody. These shares are valued at about Rs 9,42,000 crore while CDSL has 14,620 million securities in custody valued at Rs 90,935 crore as on date, according to data on their respective websites. |
| CDSL officials said that the huge spurt in accounts has also been due to the marked increase in the number of its depository participants (DP), which has gone up substantially from 203 a year back to 241 now. NSDL has also reported an increase in its DPs from 212 to 217 in the same period. Officials from both depositories said the slew of IPOs in the last one year has resulted in new investors signing up for new accounts. |
| In fact, sources said that a lot of these new accounts tend to become inactive after the investors sell their IPO shares after listing. "These are typical investors who invest in IPOs hoping to make a premium on listing," said a broker. |
| Both NSDL and CDSL officials refused to confirm their top DPs but sources indicate Stock Holding Corporation of India Ltd, is one of the top DPs for both the depositories while names such as HDFC Bank, ICICI Bank, Karvy and UTI Bank cropped up as among the top few DPs with NSDL and Motilal Oswal, Bank of India and Union Bank with CDSL. They added that the top 4-5 DPs constitute almost 40 per cent of the total business with both the depositories. |
| In a depository, investors surrender their material securities to a depository participant (DP). These securities are then sent to the respective companies who cancel the securities and credit the depository account with the entries. The securities on dematerialisation appear as balances in the depository account. |
| These balances are transferable like physical shares and if you want to have these 'demat' securities converted back into paper certificates, the depository can help revive the paper shares. |
| Market players said that one of the biggest reasons of buying shares in the demat form is that shares are credited into the account within 2-3 days after the end of the settlement. |
| This is unlike the average 30-40 days taken in receiving physical shares from the registrar and transfer agent and sometimes with objections, they added. |
| "The possibility of loss or theft of the certificates is eliminated besides the additional benefit of a lower 0.50 per cent stamp duty, which works out to Rs 50 for transfer of shares worth Rs 10,000," said a broker, adding that they also had no fear of bad delivery while selling demat shares. |
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