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

Merits and Demerits of Direct and Indirect account methods

Presentation by

National Securities Depository Limited (NSDL),

INDIA


Direct vs indirect account method l.jpg

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