| Why is a Depository Needed?
The need for a depository arose from shortcomings in the present settlement system, resulting in:
- lengthy delays in delivery, settlement and transfer of securities;
- tedious procedures for verification of securities and transfer deeds;
- considerable time involved in despatching cash dividends and bonus shares;
- risk of damaged, lost, forged and duplicate securities;
- serious problems associated with physical custody;
- tedious procedure involved in pledging of physical securities to raise capital.
CDBL, by converting physical certificates into electronic form, will eliminate the risks of damaged, lost, forged and duplicate share certificates. The instantaneous delivery through electronic book entry will result in immediate transfer of ownership, which presently can take over a month. CDBL, in the long term, will also reduce the costs of the investing public.
Investors will enjoy many benefits in buying and selling shares in the depository mode, such as:
- Instantaneous transfer: no delays in delivery, settlement or transfer
- Elimination of risks associated with physical certificates such as fake, duplicate shares, protection against loss, mutilation or theft of share certificates etc.
- Reduced hassle of paper work
- Faster settlement cycles
- Convenient method of consolidation of folios / accounts;
- Holding investments in equity, debt instruments and Government Securities in a single account
- Speedy disbursement of non-cash corporate action benefits like bonus and rights into investors accounts
- Electronic credit of new issues (IPO) into investors accounts
- Regular account status updates available to investors at any point of time