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Merits and Demerits of Direct and Indirect account methods PowerPoint PPT Presentation


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Merits and Demerits of Direct and Indirect account methods. Presentation by National Securities Depository Limited (NSDL), INDIA. Direct Account Participant Account Beneficiary Account . Indirect Account Participant Account . Direct vs. Indirect Account Method.

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Merits and Demerits of Direct and Indirect account methods

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Merits and demerits of direct and indirect account methods l.jpg

Merits and Demerits of Direct and Indirect account methods

Presentation by

National Securities Depository Limited (NSDL),

INDIA


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Direct Account

Participant Account

Beneficiary Account

Indirect Account

Participant Account

Direct vs. Indirect Account Method


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Legal Framework

  • Depositories Act 1996

  • Dematerialization of securities

  • Option to hold securities in dematerialized/physical form

  • Depositories to maintain accounts at Clients level as well as at Participants level

  • Beneficial ownership remains with the Client

  • Corporate decisions in terms of voting etc., exercised by the Clients directly


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Challenges of Direct Account Method

  • Large IT infrastructure requirement

    -Processing of large number of

    instructions

    -Large database

    -Demand for a higher bandwidth

  • Reconciliation

    -Participant Level

    -Beneficiary Level

  • Backoffice Reconciliation for participants


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Benefits of Direct Account method

  • Ability to provide the shareholder information to the issuers

  • Efficient distribution of corporate benefits

  • Investors can verify their account information from the depository

  • Ease in implementation of STP

  • Ease in implementation of statutory requirements

  • More Safety for investors


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THANK YOU


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