REPORTS STUDY ON DEMATERIALISA

REPORTS STUDY ON DEMATERIALISATION OF SECURITIES
INDEX
CHAPTER-I:
INTRODUCTION:
> Objectives of study
> Scope of study
> Methodology of study
> Limitations of study

CHAPTER-II:
REVIEW OF LITERATURE

CHAPTER-III;
COMPANY PROFILE

CHAPTER-IV;
DATA ANALYSIS & PRESENTATION:
> Historical background of DEMAT
> Current scenario
> Account opening and maintenance
> Settlements
> Rematerialisation

CHAPTER-V:
CONCLUSION
BIBLIOGRAPHY
APPENDICES
CHAPTER-I

INTRODUCTION
FINANCE:

Finance is the process of conversion of accumulated funds to productive usage. Finance helps to direct the flow of economic & facilitate in the firm’s smooth operations.
According to HOWARD AND OPTIONS Finance is defined as “the administration area of set of administrative functions in an organization which has to do with the management of flow of cash so that the organization will have the means 2 carry out its objectives as satisfactory as possible and at the same time meet the obligations as they become due”.

FINANCIAL SYSTEMS:

It is a set of markets and institutions to facilitate the exchange of assets and risks. Indian financial system comprises of three parts viz., FINANCIAL INSTITUTIONS or INTERMEDIARIES, FINANCIAL MARKETS, FINANCIAL INSTRUMENTS. Financial Intermediaries, provide funds by pooling the funds from investors. They are the commercial banks, mutual funds, insurance companies, provident funds, factors &non banking financial institutions etc…Financial instruments, through which the firm can raise funds from public or institutions. Some of them are equity shares, preferential shares, bonds, commercial papers, certificate of deposits etc…

FINANCIAL MARKETS:

Financial markets consist of two parts.
1) Capital market
2) Money market

Money market is a market for dealing in monetary assets of short-term nature for meeting the temporary cash requirements. Capital market is a market for long-term funds. Capital market has two
segments.

1) Primary market (New Issues Market)
2) Secondary market

The New Issue Market deals in new securities i.e. Securities, which are not previously offered to the investors. The primary market does not have any organizational setup and is recognized only by the specialist institutional services that it renders to the lenders and borrowers of capital funds.

The secondary market deals in old/existing securities, which were granted in stock exchange listing. Stock exchanges provide liquidity to investments. It has a physical existence and a geographical area.

OBJECTIVES OF THE PROJECT:
* To know the mechanism in the Demat
* To study the activities in Primary Market and Secondary Market in
the context of Dematerialization
* To study the activities of Depository Participants
* To study the process of Settlement
* To study the process of DEMAT
* To know the advantages of the DEMAT
* To know the services provided by the Depository Participant

SCOPE OF THE STUDY:

The scope of the study is confined to the process of dematerialization of securities and its advantages.

The scope of the project is limited to the depository participant services through depositors.
METHODOLOGY OF THE STUDY:

The study is based on both the primary and the secondary sources of data.
The source of primary data is from the unstructured interview of the officials in the company.

The secondary data is collected from the websites:

* www.nseindia.com
* www.moneycontrol.com
LIMITATIONS OF THE PROJECT:
> By not considering the entire depository participant’s implications
elating to the pattern of trading may have been missed in the study.

> The study is confined to only depository participants services through Depositories

> NSDL. Exhaustive analysis, problems of listing and management of
trade and SEBI guidelines of relating there lot are not covered due to
limited & keep the study in manageable limits
CHAPTER-II
REVIEW
OF
LITERATURE

DEMATERIALISATION
DEFINITION:

Dematerialization is the process by which a BO can get his physical securities converted into electronic form.
Pre-requisites for dematerialization are:

1. Investor should have a demat account with any DP of CDSL.
2. Securities to be dematerialized must have been admitted in CDSL
i.e. ISIN for the securities should be available in CDSL
3. Investor should be the registered holder for the securities in the
books of the company.

The BO submits a request to the DP in the Dematerialization Request Form (DRF) along with the certificates. The DP verifies the information on the DRF and physical certificates and enters the details in the system to setup a request electronically. The DP sends the physical documents to the concerned issuer/RTA. If the Issuer/RTA find the DRF and certificates in order, it registers CDSL as the registered holder of the securities and confirms the DRN electronically to CDSL. On receiving such confirmation, CDSL credits the BO account. The process flow, of a demat request is given below:

If the issuer/RTA rejects all or some of the certificates in a demat request then the same are sent back to the DP mentioning the rejection reason(s). DP will then ask the BO to rectify the reason of rejection and send the certificates again for dematerialization under a fresh demat request.

Dematerialization can be normal dematerialization as explained above or it can be “Transfer-cum-Dematerialization (TCD)” or “Transposition-cum-Dematerialization”.
TRANSFER-CUM-DEMATERIALIZATION:

When physical securities are sent to the issuer / RTA for transfers by the buyer, the Issuer/RTA completes the transfer process and records the securities in the name of the concerned buyer in the Register of Members.

If the Issuer/RTA is providing transfer cum dematerialization facility, the certificates are not dispatched to the concerned buyer. Instead the Issuer/RTA intimate the buyer about the transfer and gives the buyer an option to hold the transferred securities in demat form by issuing an “Option letter”.

The investor on receiving such an option letter may opt for holding the transferred securities in demats form. In such a case, the investor has to open a demat account, if not already opened, fill up a DRF, attach the option letter along with the DRF and submit it to the DP. Rest of the process remains same as explained above for normal demat.
Transfer-cum-demat request can be set-up for a quantity up to 500 securities only. In case the Issuer/RTA does not receive demat request within 30 days of the date of issuing the option letter then the physical securities may be dispatched to the concerned buyer directly.

TRANSPOSITION-CUM-DEMATERIALISATION:

Transposition is applicable in situation where the demat account has been opened in the name of A,B,C and some of the certificates are in any other order of holder names such as A,C,B or B,C, A or C,B,A etc., i.e. holders names are same but order in which they appear is different.

DEMATERIALIZATION PROCEDURE:

ACTION BYB.O.;

NORMAL DEMAT:

For dematerialization BO should submit the following documents to the DP

1. Duly filled DRF giving all details as required on the form. The DRF
should be signed by account holder(s) or power of attorney (if any).

2. Physical certificates

Demat requests for lock-in securities cannot be set up along with the free securities i.e. the BO will have to fill separate DRF for securities which are free (without encumbrances) and a separate DRF for securities under lock-in with different lock-kn reasons and different lock-in expiry dates.

Lock-in reason can be any of the following:

1. Director / Relative Quota
2. Employee Quota
3. Preferential allotment
4. Promoters Quota
5. Underwriters Quota
6. Private Placement
7. 54E (a) of IT Act 1961
8. 54E(b)of IT Act 1961
TRANSFER CUM DEMAT:

In case of Transfer-cum-Demat, BO should submit the following documents to the DP.

1. Duly filled DRF

2. Original option letter received from the Issuer/RTA

TRANSPOSITION CUM DEMAT:

In case the BO intends to transpose and demat the securities following documents have to the submitted to the DP

1. Duly filled DRF

2. Duly filled TRPF

ACTION BY DP:

On receiving a DRF along with other documents from the BO, DP must ensure the following before accepting the same:

1. The securities intended for dematerialization are admitted by CDSL.
If not then the DP shall inform the same to the investor.

2. Correct ISIN is selected where the security of an Issuer has more then
one ISIN.

3. Certificates are in names of maximum three holders only.

The DP must verify the following:

1. The DRF, the TRPF (if applicable) are filled completely.
2. The certificate details mentioned on the DRF and on the certificates enclosed, tally.
3. Name(s) of the holder(s) appearing on the certificates exactly tally with those recorded under the BO account maintained with CDSL.
4. All the holders have signed the DRF, the TRPF (if applicable) and the signature of the account holders’ match with those recorded by the DP.

If there is any discrepancy in any of the details, the DP will get the same rectified from the investor and the error free DRF will be taken up for further processing by the DP. Immediately on receipt of DRF along with the certificates, the DP should give an acknowledgement to the BO.

The details from the DRF & the certificates are entered in the CDSL system. On successful entry of details, the system generates a unique number called as Demat Request Number (DRN), which serves as a reference number. The DP writes the DRN on the DRF. The DRF details are immediately available electronically to the Issuer/RTA after the DRN is generated.
The DP will deface and mutilate the certificates to avoid misuse in case they are lost in transit. The DP will authorize the DRF by putting his seal & signature. The certificates & the original DRF is sent to the Issuer/RTA along with a covering letter. A copy of the DRF is to be maintained by the DP for its own reference and records.

The DP will then capture the dispatch details such as the dispatch reference no, dispatch date, name of the courier etc in the CDSL system. The DP must dispatch the physical documents within 7 working days from the date of receipt of physical documents by the BO.

ACTION BY ISSUER / RTA:

The Issuer / RTA must complete the dematerialization process within a period of 15 days, or any such period as specified by CDSL from time to time, from the date of physical receipt of the DRF. The procedure given below is also applicable to Transfer-cum-Demat / Transposition.

After receiving DRF along with physical certificates and other documents as the case may be, the Issuer / RTA will access electronic details from the CDSL system. The Issuer / RTA will check whether the:

1. DRF is authorized by the DP.
2. Details as mentioned on the DRF and as received electronically from
CDSL, tally
3. Signature of BO’s on the DRF tally with the signatures recorded by
him.

If the electronic and physical details match then the Issuer/RTA gives credit in the BO’s demat account and transfers the registered ownership of securities in the name of CDSL. The Issuer / RTA shall inform the details of the securities dematerialized to all stock exchanges where the security is listed (as per the requirements of the respective stock exchanges). The Issuer / RTA should also furnish such a certificate to CDSL on a quarterly basis.

If the electronic and physical details do not tally, the Issuer/RTA will inform the DP. The DRF, certificates and any other documents received along with the DRF will be sent back to the DP under rejection. Appropriate reason of rejection must be specified so as to enable the DP to rectify the same.

The major reasons under which a demat request can be rejected by an Issuer/RTA are as under

1. DRF/Certificates(s) not received within 15 days from the date of
electronic request logged into the system by the DP

2. DRF not complete

3. Signature (s) does not match

4. Forged/Fake/Stolen Certificate

5. Duplicate certificate already issued
6. Holders’ name(s) does not match

7. Certificate details do not match

8. Court injunction

9. DRF sent to incorrect Issuer/RTA

10. Quantity mentioned on the certificates is more or less than electronic
request

11. Stop transfer

12. Certificate of incorrect ISIN being missed up in the DRF

13. Certificates’ having different lock-in release dates being missed up
with the same DRF

14. DRN set up under wrong ISI15.Transfer cum demat — Certificate(s)
sent to BO
CHAPTER-III
COMPANY PROFILE

COMPANY PROFILE

India is on the threshold of entering a new economic era. An era of fast paces economic growth. With various new commercial opportunities opening up. These new industries and business ventures are often global -Multi nationals, collaborations, joint ventures, technology transfers are the new buzz words. Establishing and developing these genres of companies is a complicated process. In today’s scenario of frenetic activity, the need for quality financial services is acute.

To crystallize these projects a financial company that understands the individual needs is required. Thus the need for USHAKIRAN FINANCE LIMITED is it providing corporate finance or in management of issues or in dealing with the securities market.

USHAKIRAN FINANCE LIMITED is an existing profit making company. It is an integrated finance company established essentially as a fund based financial service organization as diversified its range of activities from fund based to non fund based activities and further stepped up and expanded the fund based activities and other financial services.

It is a professionally managed company comprising chartered accountants, Company Secretaries, MBAs, Cost Accountants and software professionals. With an infrastructure that matches with the international standards and practices, staff support and strong network, the company efficiently caters financial services to its diverse clientele.
The Board of Directors of the company comprises eminent and experienced professionals who have got abundant experience by virtue of their association earlier with public sector undertakings and multi national under takings. Shri T.ADINARAYANA the chief promoter is a member of the Institute of Chartered Accountants of India, the ICWA of India and ICS of India. He was associated with the financial institute for about 9 years and is well versed in all aspects of term lending, project financing, and project advisory services. Many Leading industrial conglomerated has used the services particularly in the areas of finance, taxation, secretarial and public issues related matters. He is also a member of the Hyderabad Stock Exchange Limited.

The company caters mainly to the requirements of corporate clients in the variety of activities which include the following:
* Leasing and Hire purchase finance
* Inter corporate deposits
* Bill Discounting
* Loans Syndication
* Placement of Commercial papers
* Mergers, Amalgamations and Acquisitions
* Project Counseling and Advisory Services
* Project Appraisals
* Under writings
* Merchant Banking
* Issue Management
* Placement of Securities
* Marketing of Public issues
* Brought out deals
* Placement of share to NRJs/OCBs, FIs, and FIIs
* Fund Management
* Equity Research Analysis
* Investment Banking
* Stock Broking and Commodities trading
* Joint Ventures

CHAPTER-IV
DATA ANALYSIS
&
INTERPRETATION
HISTROCIAL BACKGROUND OF DEMATERIALISATION:

Earliest records of securities trading in India are available from the end of the eighteenth century. Before 1850, there was business conducted in Mumbai in shares of banks and the securities of the East India Company, which were considered as Securities for buying, selling and exchange. The shares of the commercial Bank, Mercantile Bank and Bank of Bombay were some of the prominent shares traded. The business was conducted under a sprawling banyan tree in front of the Town Hall, which is now in the Horniman Circle Park

In 1850, the Companies Act was passed and that heralded the commencement of the joint stock companies in India, it was the American civil was that helped Indians to establish broking business. The leading broker, Shri Premchand Roychand designed and developed the procedure to be followed while dealing in shares.

In 1874, the Dalai Street became the prominent place for meeting of the brokers to conduct their business. The brokers organized an association on 9th July 1875 known as “Native Share and Stock Brokers Association” to protect the character, status and interest of the native brokers. That was the foundation of The Stock Exchange, Mumbai. The Exchange was established with 318 members.
The Stock Exchange, Mumbai did not have to look back as it started riding high in the ladder of growth. The Stock Exchange is a market place, like any other centralized market, where buyers and sellers can transact business in securities at a given point of time in a convenient and competitive manner at the fairest possible price. In January 1899, Mr. James M. MacLean, M.P., inaugurated the Brokers’ Hall.

After the First World War, the Stock Exchange was housed property at an old building near the Town Hall. In 1928, the present premises were acquired surrounded by Dalai Street, Bombay Samachar Marg and Hamam Street. A new building, the present location, was constructed and was occupied on 1st December 1930.

In 1950 the regulation of business in securities and stock exchanges became an exclusively Central government subject following adoption of the Constitution of India. In Securities Contracts (Regulation) Act was passed by the Parliament of India, to regulate the securities market, SEBI was initially established on October 12, 1988 as an interim board under control of the Ministry of Finance, government of India. In 1992, the SEBI Act was passed through which the SEBI came into existence.

Hence SEBI acquired statutory status on 30th January 1992 by passing an ordinance, which was subsequently converted into an Act passed by the Parliament on April 4, 1992.
The main objectives of SEBI are to protect the interest of the investors, regulate and promote the capital market by creating an environment, which would facilitate mobilization of resources through efficient allocation, and to generate confidence among the investors. As such, SEBI is responsible for regulating stock exchanges and other intermediaries who may be associated with the capital market and the process of public companies raising capital by issuing instruments that will be traded on the capital market. SEBI has been empowered by the Central Government to develop and regulate capital markets in India and thereby protect the interest of the investors.

In 1992, Over the Counter Exchange of India (OTCE) came into existence where equities of small companies are listed. In 1994, National Stock Exchange (NSE) came into existence, which brought an end to the open cut-cry system of trading securities which was in vogue for 150 years, and introduced Screen Based Trading (SBT) system. BSE’s On Line Trading System was launched on March 14, 1995. Now the trading in securities is done using screen based trading method through duly authorized members of the exchange.

In SBT, investors place buy and sale orders with their brokers who enter the orders in the automated trading system. When buy and sale orders match, a trade is generated and trade details are given to the respective brokers. After a trade has taken place, the buyer has to pay money and the seller has to deliver securities.
On the stock exchange(s), hundreds and thousands of trades take place every day. Buyers and sellers are spread over a large geographical; area. Due to these problems completing a trade by paying cash to seller and securities to buyer immediately in execution of trades on an individual basis in virtually impossible. So the stock exchanges allow trading to take place for a specified period, which is called as a ‘Trading Cycle’.

A unique settlement number identifies each trading cycle. Once the trading period is over, buyer broker pays money and seller broker delivers securities to the CC/CH on a predefined day. This process is called as Pay-in. After pay-in, securities are given to the buyer brokers and the CC/CH gives money to the seller broker. This process is called as Payout. This process of pay-in and payout is called settlement.

Initially the trading cycle was of one fortnight, which was reduced to one week. The transactions entered during this period, of a fortnight or one-week, were used to be settled either by payment for purchase or by delivery of share certificates sold on notified days one fortnight or one week after the expiry of the trading. The settlement schedules are made known to the members of the exchange in advance.
The weekly settlement period was replaced by daily settlements, popularly known as rolling settlements, in which each day is separate trading day. With effect from December 2001, T+5 rolling settlement cycles was introduced for all equities where ‘T’ is the ‘Trading Day’ and pay-in and Payout for the settlement was done on 5th business day after trade day. For example, if T was Monday, the pay-in and payout were done on next Monday, as Saturday and Sunday are not counted as business days. T+5 cycles were further shortened to T+3 settlement cycle w.e.f. April 1, 2002.

CURRENT SCENARIO:

SEBI has since introduced T+2 rolling settlements from April 1, 2003. T+2 settlement cycle means that the final settlement of transactions done on T, i.e. trade day by exchange of monies and securities between the buyers and sellers respectively occurs on second business day after the trade day excluding Saturdays, Sundays, bank holidays and exchange holidays.

DAY ACTIVITY T * Trading and daily downloading of statements showing details of transaction and margins at the end of each trading day
* 6 A/7 A* entry by the member- brokers/confirmation by the custodians T + 1 Confirmation of 6A/7A data by the custodians up to a specified deadline time. Downloading of securities and funds obligation statement by members.

T + 2 Pay-in of funds and securities and payout of funds and
securities by Pre-specified deadline times. The members are required to submit the pay in instructions for funds and securities to banks and depositories respectively. T + 3 Auction for shortages in delivery of securities T + 4 Auction pay-in and pay-out of funds and securities.

*6A/7A: A mechanism whereby the obligation of setting the transactions done by a member broker on behalf of a client is passed on to a custodian based on his confirmation. The custodian can confirm the trades done by the members on-line.
Trading on the on-line screen based system (BSE’s On-Line Trading system, BOLT for BSE and National Exchange for Automated Trading, NEAT for NSE) is conducted from Monday to Friday between 9:55 a.m. and 3:30 p.m. The scripts traded on The Stock Exchange, Mumbai are classified into ‘A’, ‘B1′, B2′,’C’, ‘F’,G’, and ‘Z’; groups.
A, B1, B2 and C group’s represent the equity market segment.

F group represents the debt market (fixed income securities) segment.
BSE has commenced trading in Govt. Securities for retail investors under G group w.e.f. January 16, 2003.

Z group covers the companies, which have failed to comply with listing requirements and/or failed to resolve investor complaints or have not made the required arrangements for dematerialization of their securities with both the depositories.

PROBLEMS WITH PHYSICAL MODE OF SETTLEMENT:

The capital market was a marginal institution in the financial market for almost three decades after India’s independence. However, until late eighties the common man kept away from capital markets.

Not many companies accessed the capital market and, thus, the quantum of funds mobilized through the market was meager. A major problem, however, continued to plague the market. The Indian markets were literally weighed down by the need to deal with shares in the paper form.

There were problems galore with handling documents — fake and stolen shares, fake signatures and signature mismatches, duplication and mutilation of shares, transfer problems etc. The trading volumes were small due to small investing population.
The following are some of the major problems faced for physical certificates by the investors:

a. Inordinate delay in receiving securities after transfer by the
companies.
b. Return of share certificates as bad deliveries on account of signature
mismatch or forged signature of transferor or fake certificates.
c. Delay in receipt of securities after allotment by the companies.
d. Non receipt of securities.
e. Procedural delays in getting duplicate shares/debenture certificates.
f. Storing physical certificates.
Lack of modernization became a hindrance to growth of secondary market and resulted in creation of cumbersome procedures and paper work. However, the real growth and change occurred from mid-eighties in the wake of liberalization initiatives of the Government.

The reforms in the financial sector were envisaged in the banking sector, capital market, securities market regulation, mutual funds, foreign investments and Government control.
These institutions and stock exchanges experienced that the paper certificates are the main cause of investor disputers and arbitration cases. Thus, the Government of India decided to set up a fully automated and high technology based model exchange, which would offer screen based trading and depositories as the ultimate answer to all such reforms.

Therefore, the Government of India promulgated the Depositories Ordinance in 1995. However, both Houses of Parliament passed the Depositories Act in 1996. The unparalleled success of the introduction of the depository concept in the Indian capital markets is reflected in the on-going successful reduction in the period between trading and settlement.

PROBLEMS WITH PHYSICAL MODE OF SETTLEMENT:

The capital market was a marginal institution in the financial market for almost three decades after India’s independence. However, until late eighties the common man kept away from capital markets.

Not many companies accessed the capital market and, thus, the quantum of funds mobilized through the market was meager. A major problem, however, continued to plague the market. The Indian markets were literally weighed down by the need to deal with shares in the paper form.

There were problems galore with handling documents – fake and stolen shares, fake signatures and signature mismatches, duplication and mutilation of shares, transfer problems etc. The trading volumes were small due to small investing population.
The following are some of the major problems faced for physical certificates by the investors:

a. Inordinate delay in receiving securities after transfer by the
companies.
b. Return of share certificates as bad deliveries on account of signature
mismatch or forged signature of transferor or fake certificates.
c. Delay in receipt of securities after allotment by the companies.
d. Non receipt of securities.
e. Procedural delays in getting duplicate shares/debenture certificates.
f. Storing physical certificates.

Lack of modernization became a hindrance to growth of secondary market and resulted in creation of cumbersome procedures and paper work. However, the real growth and change occurred from mid-eighties in the wake of liberalization initiatives of the Government.

The reforms in the financial sector were envisaged in the banking sector, capital market, securities market regulation, mutual funds, foreign investments and Government control.
These institutions and stock exchanges experienced that the paper certificates are the main cause of investor disputers and arbitration cases. Thus, the Government of India decided to set up a fully automated and high technology based model exchange, which would offer screen based trading and depositories as the ultimate answer to all such reforms.

Therefore, the Government of India promulgated the Depositories Ordinance in 1995. However, both Houses of Parliament passed the Depositories Act in 1996. The unparalleled success of the introduction of the depository concept in the Indian capital markets is reflected in the on-going successful reduction in the period between trading and settlement.

ACCOUNT OPENING AND MAINTENANCE:

An individual who wants to keep his / her cash safe in a bank has to open an account with a bank as a first step and maintain cash in book entry form. Similarly, an investor has to open a demat account with any DP of CDSL as a first step to hold securities in demat form in the depository system. The investor can open an account with any DP of CDSL. CDSL system facilitates opening of demat accounts for different categories of investors.

Demat accounts opened with CDSL are referred as ‘Beneficial Owner Accounts’ or ‘BO account’. As explained earlier, when securities are held in physical form name of the investor is recorded in the books of the company as ‘Registered owner’. When the same securities are converted into electronic form and held in a demat account, the depository becomes registered owner of the securities.
Since depository is acting as a custodian of the securities, original investor is legally entitled for all rights / liabilities attached with securities and hence are called a ‘Beneficial Owner’. All accounts opened on CDSL system are beneficial accounts irrespective of the type of account.

A demat account may be opened and maintained in the name(s) of one person (sole holder) or more than one persons (joint holders). All the joint-holders have to sing the application form and the agreement.

The supporting documents and photograph should also be provided for all joint-holders. Though the beneficial ownership of jointly held securities vests equally in all joint-holders, communications about the joint depository account are provided only to the first holder. The dividend and interest warrants, annual reports and notices for meetings are also issued to the first-named joint holder only. All Bo accounts are operated at DP level; however, data is maintained at CDSL level.

A BO does not have direct access to CDSL system and must act through his / her DP. While opening an account, the BO can give a standing instruction (Confirmation waiver or Purchase waiver) to allow credits automatically to the account without separate instructions.

ACCOUNT TYPES

The are two main types of accounts that can be opened on CDSL system.

1. Accounts to be maintained by DPs.
2. Clearing Corporation / Clearing House accounts.

ACCOUNT OPENING;

PROCEDURE:

The main objectives of account opening are to allow investors to perform the following activities:

1. Dematerialize physical securities currently held by investors and
reflect securities-ownership by electronic book-entries in CDSL.

2. Buy and sell dematerialized securities, which are admitted in CDSL.

3. Receive statements of all dematerialized holdings of securities as BO.

4. Receive securities in electronic form in case of Initial Public
Offerings, Rights Issues, Bonus Issues, Mergers, Acquisitions and
Amalgamations, etc.

5. Pledging of securities.

The BO and the DP will enter into an agreement and each one will abide by the terms and conditions of the agreement. The BO will give the account opening form along with the relevant documents to the DP.

The DP will check all the documents and in case of any additional information is required shall call for the same. If the DP finds all the papers as correct, he will send a confirmation to the BO. (E.g. a tear off slip on account opening form as counter slip.)

The DP will capture details from the account opening form filled by the BO in the front-end system provided by CDSL. The DP will scan the signature(s) of the BO(s) as well as the power of attorney signatures, if applicable. Once the DP commits the transaction, the data is captured and stored at CDSL.

A unique BO account number is generated by the system and this can be seen at the DP front-end system. This will be done on-one and the information gets transmitted to CDSL instantaneously. The DP will record the BO ID on the original application form and on the DP-BO agreement for cross-reference.

A BO will be classified with a BO status. These status are system defined. BO status indicates whether the BO. is an Individual, NRI and Corporate Body, Bank etc. the information to be captured for each BO status will be different.
The user will first select proper status code to use for the set-up of BO. Only those fields, which are pre-defined by CDSL for the status code, will come up on the screen for the user to enter.

The BO ID is a combination of the CDSL Code (1), DP Type(l), DP Code (4) and Branch Code (2), Serial no(7), and the Check Digit (1).-Figures in bracket indicate number of characters.

The system maintains a consistent running sequence of account numbers at the DP front-end system. The DP sends the BO a final confirmation letter for having opened the account mentioning the account number therein. In case of a joint account, all correspondence / queries relating to BO account will be sent to the first holder only . The account cannot be made active till the BO’s signature(s) have been captured.

The account opening form for Individual Investors, Institutional Investors, Corporate Investors, and CMs can be common. However, a DP may print separate forms for a each type of BO if found necessary or convenient./ those sections of the application form, which are not relevant to a particular type of BO, should be marked ‘Not Applicable’ (N.A.).

The documents specified at the end of the account opening form are to be submitted along with the account opening form. The BO’s DP may also specify additional documents to be supplied with the account opening form. A DP shall, before opening any account of any BO make inquiries as may be necessary and exercise due care and caution in ascertaining the bonafides of the intending BO, scrutinize the documents relating to the securities in respect of which account is intended to be opened, for their authenticity.

The DP should ensure that a BO having different sub-status for different ISINs, opens a separate BO a/c for different BO sub-status e.g. director of a company will have a different sub-status for shares held by him in that company and will have another BO account.

Following are the common details to be provided on account opening form for all types of accounts:

1. Name of the holder(s)

2. Address & phone /fax number.

3. Bank details, like, name of bank, type of account
(current/savings) account number, Branch address, MICR No.
etc.

4. PAN number, if applicable.

5. Specimen signatures.
DP-BO AGREEMENT

Each BO has to sign a DP-BO agreement with the DP before opening a demat account. However, a BO belonging to any one of the categories specified under the CDSL Byelaws need not enter into an agreement with the DP.

These BO categories are as follows:

1. A foreign institutional investor registered with the SEBI, who has entered into an agreement with the DP either directly or through its power of attorney holder in accordance with the provisions of Regulation 16 of SEBI (Foreign Institutional Investors) Regulation, 1995. Provided that such agreement gives the DP an authority to act on behalf of the foreign institutional investor for availing the services of the depository; and a copy of such agreement has been filed with the SEBI.

2. An International Multilateral Agency and Global Custodian who has entered into agreement with the DP pursuant to Regulation 17 of SEBI (Custodians of Securities) Regulations, 1996 and such agreement inter alias confers authority on the DP to avail of the depository services on behalf of an International Multilateral Agency and Global Custodian.
DOCUMENTS TO BE SUBMITTED WHILE OPENING A DEMATS ACCOUNT

List of documents / information to be submitted by different categories of BOs along with the account opening form is given below. The DP should verify copies of the documents against the original documents.

INDIVIDUAL INVESTORS

1. Introducer’s Name, Address, and Contact Number.

2. Name, Address, Tel No. Etc. of Magistrate/Notary Public/Executive
Magistrate in case of attestation done by any of them.

3. Power of Attorney, if applicable.

4. Photocopy of driving license/Election ID card/Passport/Bank
attestation/Pan Card to determine intending BO’s identity.

5. Ration card / passport / voter’s ID / driving license / bank passbook as a proof of address.

6. Birth Certificate in case of minors.

7. One passport size photograph of applicants with their signatures
across the face of the photograph.
HUF

1. All the above documents as taken for Individual investors at the time
of account opening hold good. In addition HUF signature under the
stamp of HUF.

2. List of family members.

CORPORATE INVESTORS:

1. Certified true copy of board resolution for persons authorized by the
board to act as authorized signatories.

2. Names of the authorized signatories, designation, and their specimen
signatures.

3. POA given to the authorized signatories.

4. Name, Address, Tel No. etc. of Magistrate/Notary Public/Special
Executive Magistrate incase of attestation done by any of them.

5. Memorandum and Articles of Association of the company.

6. One passport size photograph of each authorized signatory with their
signatures across the face of the photograph.
CM, FII, NRI AND OCB

1. Copy of Certificate of Registration with SEBI (where applicable).

2. Power of Attorney (if applicable).

3. Certified true copy of board resolution for persons authorized by the board to act as authorized signatories.

4. Names of the authorized signatories, designation, and their specimen signatures.

5. Name, Address, Tel No. etc. of Magistrate/Notary Public/Special Executive Magistrate in case of attestation done by any of them.

6. RBI Registration for FII, NRI, OCB (if applicable).

7. Bank A/c details with respective status like NRE, NRO, etc.

8. Memorandum and Articles of Association of the company.

9. Conduct Certificate from the stock exchanges where BO is a CM.

10. One passport size photograph of each of the authorized signatory with their signatures across the face of the photograph.

SETTLEMENTS:

When securities are purchased or sold, the same need to be taken into buyer’s account or transferred o9ut of seller’s account. Since settlement of trades in all listed securities is to be compulsorily done in the dematerialized form, the transaction has to be routed through the depository system. The securities could either be sold or purchased through the stock exchange mechanism or outside the stock exchange mechanism.

A demat account can be debited / credited only on instructions of the BO. BO therefore needs to give instructions to his / her DP to effect debit / credit of securities out of his / her demat account. However, most of the time instructions are required only for debit since a BO can give a one-time standing instruction to the DP, for crediting the account without a credit instruction, at the time of account opening. This one-time instruction is known as “Purchase waiver”. The DP executes all instructions in the CDSL system, only after verification of the signature of the account holder(s).

Transfer of securities in / our of the demat account can arise in the following instances

a) For execution of off market transaction i.e. transactions between two accounts on mutually agreeable terms, i.e. a transaction done on a person-to-person basic, without going through the stock exchange mechanism.

b) For settling on market trades i.e. trades done by the investors through stock exchange mechanism and settled using the settlement mechanism of the same exchange.

c) For inter depository transfers i.e. transfer of securities from an account held in one depository to an account held in the other depository.
For transfer of securities, BO is required to submit a duly filled in instruction slip, in the format specified by CDSL, to his / her DP for execution. This instruction slip can be used for transfer of securities necessitated due to any of the above reasons.

Booklets of instruction slips are issued to the BO after an account has been opened. The instruction slips have the BO ID and a serial number preprinted on them. The DP is required to keep a proper record in respect of the range of serial numbers of the instruction slips issued to each BO.

The BO should submit the instruction slip, duly filled in and signed by all joint holders or a duly constituted POA (if any, to the DP. The BO should clearly specify the type of transaction for which the instruction slip is submitted. Any alternations/ modifications to the instruction slips already signed by the holder(s) should be again authenticated by the holder(s).

OFF-MARKET TRANSACTIONS:

Off-Market transaction can be used for transfer securities from

1. One BO account to other BO Account

2. BO account to CM account for pay-in

3. CM account to BO account for pay-out

The seller BO will submit a duly filled in instruction slips, giving details of the buyer BO, ISIN. Quantity etc., to the DP. On receipt of the instruction slip, the DP will verify the same and enter the off-market instruction in the CDSL system. If the buyer BO has not given one time standing instruction i.e. purchase waiver, the buyer BO will be required to give receipt instruction to his DP for receiving securities in the account.

The instruction entered by the DP will be executed in the “execution date” as specified by the BO in the instruction slip. At the time of execution, if sufficient balances are present in the seller BO account, the account will be debited and corresponding credit will be given in the buyer BO account.

If the balance in the seller BO account is insufficient, the instruction will remain in the “Overdue” status. For all instructions will “Overdue” status, CDSL system will check for availability of balances at pre-defined intervals till the end of the execution date (till EOD). At the end of day of the execution date, if balances are still insufficient the instruction will be marked as failed.
ON MARKET TRANSACTIONS:

Investors buy / sell securities on the trading platform provided by the stock exchanges through SEBI registered CMs. The day on which the trade is executed is called as the Trading day or the “T” day. On receiving confirmation, from the CM, of execution of the trade, the buyer BO has to deliver the funs (money) to his / her CM and the seller BO has to deliver the securities to his / her CM. The CM delivers the funds and the securities received from the BO to the CH / CC of the stock exchange before the stipulated time specified by the stock exchange.

The Ch / CC of the stock exchange then delivers the securities to the buying CMs and funds to the selling CMs, who have executed trades on behalf of their clients.

The activity of the CH / CC of the stock exchange of delivering funds and securities to the respective sellers / buyers is known as “Settlement of market trades”. The date on which settlement takes place is known as “Settlement date”.

The process of delivery of securities by the seller CM to the CH / CC for settlement is known as “Pay-in of securities” and the process of delivery of securities by the CH / CC to the buyer CM is known as “Pay-out of securities”. Pay-in and Payout of securities takes place at predetermined timings decided by the stock exchanges.
Settlement of on market trades is currently done on a T+2 basis i.e. settlement takes place on 2nd working day after the trade has been executed by the CM.

ADVANTAGES OF DEMAT:

Transacting the depository way has several advantages over the traditional system of share certificates.

1. The investor can avoid the expense of applying for duplicate
certificates in case of loss / mutilation of certificates.

2. Trading in demat segment completely eliminates the risk of bad
deliveries, which in turn all cost and wastage of time associated with
follow up for rectification.

3. The investor can also receive your bonuses and rights into your
depository account as a direct credit, thus eliminating risk of loss in
transit.

4. In case of transfer of electronic shares, 0.5% can be saved in stamp
duty.

5. Cost of delay/courier/neutralization the need for further follow up
with the clearing member for shares returned for company’s objection,
which happens only in case of physical securities scan, be avoided.
6. Facilitation of cash corporate actions such as dividends. CDSL
provides details of beneficial owners as on a given day (the record
date) to the issuer company/registrar so as to enable the company to
Calculate the benefits arising out of these ho91dings. The company’s
registrar and transfer agents forward the cash benefits to the investor
directly.

7. Lending and borrowing of securities: A client either a lender or a
borrower, having a beneficiary account with the DP can lend or
borrow securities in electronic form through an approved
intermediary, who has opened a special intermediary account with a
DP.

8. The creation of lend/borrow instruction will be initiated by
lender/borrower respectively through his DP.

9. Investor can expect a lower interest charge for loans taken against
demat shares as compared to the interest for loan against physical
shares.

REMATERIALISATION:

DEFINITION:

Rematerialisation is the process of converting securities, held in a demat account (i.e. electronic form) to physical form. A BO (Beneficiary Owner) intending to convert the securities into physical form submits a Demat request to the DP in a Rematerialisation Request Form (RRF).

DP verifies the information on the RRF and enters the details in the system to setup a request electronically. The system generates a unique serial number called as Rematerialisation Request Number (RRN), which can be used for future reference. The DP sends the RRF to the concerned Issuer/RTA.

If the Demat request is in order, the Issuer/RTA approves the same and confirms the RRN electronically to CDSL. On receiving such confirmation, CDSL debits the BO account. Physical certificates are sent by the Issuer/RTA directly to the investor.

STEPS:

1. The investor request for the physical certificate to its Depository
Participants through Remat Request Form (RRF)

2. The Depository Participants will inform the Depository of the request.

3. The Depository Participants in turn will also appraise the Registrar /Transfer agents

4. The depository will forward the same request to the R & T Agent

5. The Registrar / Transfer agents after printing the physical certificates
will update the Depository.

6. The depository will update the Depository Participants

7. The physical certificates are sent to the investors directly by the
Registrars.

ACTION BY BO

A BO who wishes to have balance in his demat account in CDSL, rematerialized, has to fill up a RRF in duplicate, sign it and submit the same to his DP. RRF should be signed by all holders / POA (if any).

The BO may specify on the RRF that all the quantity to be included in only one certificate (Jumbo Lot) or the certificates may be for marketable losts. Separate RRF is to be submitted for remat of free quantity and quantity under lock-in, if lock-in is for different reasons then a separate RRF is to be submitted for each lock-in reason.

ACTION BY DP

On receipt of RRF from the BO, the DP verifies the details mentioned in the RRF with the BO details maintained with CDSL. Sufficient ‘free balance’ or ‘lock-in balance’ must exist in the account for remat. Signature(s) of the BO(s) or POA holder should match with those recorded with the DP.

If all the details on the RRF are correct then the same are entered in the CDSL System by the DP on the same day or latest by the next working day from the date of receipt of RRF. When the request is set up, CDSL system generates a unique Rematerialisation Request Number (RRN) for each remat request.
Once a remat request is set up, the balances in the demat account are blocked and such securities cannot be transferred. DP records the RRN on the RRF and authorizes the RRF with his seal and signature. The DP retains a copy of the RRF for his records and sends the original RRF to the Issuer / RTA with other documents, if any.

The DP must ensure that the remat request is sent to the Issuer/RTA within two working days of request received from the BO and is honored with a period of 30 days from the date of physical receipt of the RRF by the Issuer/RTA .

ACTION BY ISSUER / RTA

On receiving the physical documents, the Issuer / RTA access the electronic request from CDSL system and verify the details as per RRF. If the remat request is acceptable, Issuer / RTA confirm the same electronically through the CDSL system debits the BO account with quantity accepted for Dematerialization.

On verification, if the details do not match, the Issuer / RTA will electronically intimate the rejection of RRF and send the rejected RRF to the DP, along with all the documents, for necessary correction / rectification. For the rejected RRF, the DP will carry out the necessary rectification in consultation with the BO and set up a fresh remat request.

A REMATERIALISATION REQUEST MAY BE REJECTED FOR REASONS SUCH AS

1. The details given in RRF do not match with electronic intimation received

2. The RRF is incomplete

3. The documents are sent to wrong RTA / Issuer

4. Necessary documents do not accompany the RRF

For all accepted remat requests, the Issuer / RTA take the following particulars on record based on RRF

1. Name of Holder(s)
2. Father’s Name/Husband’s Name of the first holder
3. Address
4. PAN
5. Tax Status
6. Age
7. Bank Account Number
8. Name of the Company
9. Quantity of securities rematerialized
10. Signature of all the Holders mentioned in the RRF
11. Whether the securities are under lock-in, if yes, then the period up to
which such securities are under lock-in and reasons for such lock-in
12. Existing Folio NO., if any

13. If POA holder operates the BO’s account, the true copy of the POA
also will be taken on record.

14. Other documents, if any The Issuer / RTA generate a folio number for
the BO or give the existing folio number, if the BO is already holding the same type of securities of the same Issuer in the physical form.

The Issuer / RTA record the name of the BO as the Registered Owner(s) of the rematerialized securities. The Issuer / RTA print the certificates in the name of Registered Owner(s) and dispatch the same to the BO.

The Issuer / RTA inform all the stock exchanges, where the securities are listed, about the news certificate numbers, distinctive numbers of the rematerialized securities (as per the requirements of the various stock exchanges). Such a certificate should also be issued to CDSL on a quarterly basis.
INTRODUCTION TO DEPOSITORY

WHAT IS A DEPOSITORY?

The Depositories Act defines a depository as “a company formed and registered under the Companies Act, 1956 and which has been granted a certificate of registration under sub-section (1A) of section 12 of Securities and Exchange Board of India Act, 1992.”

THE DEPOSITORIES ACT:

The Depositories Act, 1996, ushered in an era of efficient capital market infrastructure, improved investor protection, reduced risks and increased transparency of transactions in the securities market. It also immensely benefited the issuer companies, in terms of reduced costs and the effort expended in managing their shareholder populace. Perhaps, no other single act other than the depositories Act has had such profound all round impact on every single stakeholder in the Indian capital markets.

This legislation envisaged multiple depositories in India to ensure benefits of competition for then users of the depository system. The Depositories Act which facilitated establishment of depositories (like CDSL) in India sought to effectively curb such irregularities, and protect the interests of the investors, and paved a way for an orderly conduct of the financial markets through free transferability of securities with speed, accuracy, transparency etc.

ue to the introduction of the depository system, the investors are able to enjoy many benefits like free and instant transferability in a secured manner at lower costs, free from the problems like bad deliveries, odd-lots etc.

Today the tradable lot is reduced to “one unit” hence even a common man is able to invest money in one equity share or bond or debenture. The investor is able to save a lot on account of stamp fee as government has exempted stamp duty on transfer of securities at present. Investors are also spared from the problems of preserving the securities held in physical form

VARIOUS SERVICES OFFERED BY A DEPOSITORY:

A depository in India cannot open a demat account of an investor and / or provide services to such a person directly. For opening a demat account or availing the services offered by the depository, a person is required to approach a Depository Participant (DP) who is an agent of the depository, complete the account opening formalities as per the SEBI regulations, Depository byelaws.

Thereafter, the investor can receive securities in the demat account as well as tender the securities held by him / her in physical form for dematerialization to the DP (as explained in the subsequent part) and hold the same in book-entry form in the account.

When an investor holds securities in physical form, his / her name is recorded as registered owner in the books of the company. As per the laws currently in force in India, when the securities are converted in electronic form by way of dematerialization, name of the depository is registered in the books of the company as registered owner.
However, the investor continues to be the real owner of the securities and is entitled to receive all the benefits such as dividend, interest, bonus shares etc. in respect of the said security and as such is called as Beneficial Owner (BO) under the depository system.

Today “demat” has become a common word. The institutional and individual investors spread all over India are found to be making an extensive use of the depository participant services for holding their securities in electronic form.

FUNCTIONS OF DP:

COMMON FUNCTIONS FOR DP AND RTA:

1.TRANSFER FILES/ UPDATE DATABASE:

CDSL system parameters are defined and set up from a central point and are stored in the Host system. These parameters are the base on which user specific parameters are set up, as such these are required universally to all DP/RTA systems. This module facilitates the transfer of such parameters to all DP/RTA systems. This is to be done only once in a day just after the user logs in.
2. DATABASE ADMINISTRATION:

The Database Administration module can be used set-up authorized users. It also allows user to set up Workstation(s), Courier information and Printer.

3. MASTER FILES:

Master files module is used to inquire the master files. A user can only inquire the master data for the following basic master tables such as list of ISIN, DPs, Issuers, RTAs, Holidays, Exchanges, Settlement calendar etc. Information in these files is updated by CDSL.

4. REPORT SCHEDULER:

This module helps user to generate various reports for Master files such as list of ISINs DPs, Issuers, RTAs, Holidays, Exchanges, Settlement calendar etc.

5. NON-FINANCIAL HISTORY:

This inquiry module gives the complete audit trail of changes made and the transactions causing the changes. Only those transactions are reflected which do not affect the holdings of a particular BO-ISIN account.

6. RECOVER TRANSACTION INFORMATION:

This module is used to recover BOIDs and user details in case of reinstallation of the CDLS system.

C Indicates communication gateway status.

R Indicates workstation registration status.

S Indicates user’s sign-on status.

7. OPERATOR CONCQLE:

This module provides following functions:
1. Two way communications between the front end and the back
end.
2. Downloading of reports at the front end.

8. HOST REPORT MANAGER:
This option allows the user to manager the transaction reports. It provides facilities for viewing, printing, copying of the reports. User can download daily ISIN rate files for billing activity in back office. User can also download various communiques sent by CDSL to DP / RTA. This module is also used for pulling reports.

9. REPORT PARAMETERS:
The module is used to set up different request reports by using parameters such as sort criteria, filter criteria etc. This module also

provides facility to generate On-line reports for actives such as holding statement for his BO’s, Inter depository transactions and transaction journal.

10. END OF DAY (EOD) SCHEDULER
EOD can be declared using this module. The other options are DS Purge and Database Backup.

11. SIGNATURE DOWNLOAD:

This module allows the user to download signatures of BOs and their POAs for back office activity.
CHAPTER-V
CONCLUSION
The study revealed to us that “Dematerialization of Shares” has brought about revolutionary changes like:

* Immediate transfer of shares, thereby minimizing time

* No Stamp duties on transfer shares

* Elimination of risk with physical certificates such as bad delivery,
Fake certificates etc.,

Though there are certain shortcomings like:

* Overload of work due to heavy transactions

* Lack of necessary infrastructure and personnel at the depository
participant.
It can be taken for sure that these shortcomings will be overcome in the next few years and this process will contribute towards the making of more efficient and investor friendly market.

BIBLIOGRAPHY

> Gathered information from Mr. HARJ PARTHASARATHI of USHAKIRAN FINANCE Ltd

> Referred related articles, references, journals and certain websites.

> Material provided by P.C.S Securities Ltd.

Web Sites:

> www.5paisa.com

> www.googlesearch.com

> www.nationalstockexchange.com

> www.moneycontrol.com

> www.sdls.com

APPENDICES

Account Closure: A BO wanting to close a demat account held with any DP shall make an application in the specified format. The BO may close its account if no balances are standing to its credit in the account. In case any balance exist, then the account may be closed by rematerialisation of all its existing balances in its account and / or, by transferring its security balances to its other account held either with the same DP or with a different DP. The DP ensures that no transactions should be pending for the account

Affidavit : is any written document in which then signer swears under oath before a notary public or someone authorized to take oath that the statements in the document are true

Beneficiary Account: An investor or a broker who wants to hold shares in demat form and undertake scripless trading must have a depository account called beneficiary account with DP of his choice.

BO: The Stock exchange, Mumbai also known as BSE is one of the oldest stock exchanges in Asia with over 6,000 stocks listed.

Corporate Action: includes any action relating to payment of interest, dividend, redemption, warrants, bonus, merger, split, amalgamation and any such other action time to time.

Corporate Benefits: means benefits like dividends, interest, bonus shares, rights, preferential allotments, warrants, discount coupons, redemption at premium and such other benefits, accruing from time to time from the issuer to the BO in respect of the securities held by such BO.

DRF: In order to dematerialize his physical shares the investor (registered owner) submits a request to the DP in the Dematerialization Request Form (DRF) along with the certificates of securities to be dematerialized.

DRN: Is a unique number generated by CDSL system when a demat request is set up.

Depository: A Depository is an organization where the securities of an investor are held in electronic form, at the request of the investor through the medium of a DP. It is a company formed and registered under The Companies Act, 1956 and which has been granted a certificate of registration under the relevant sections of the SEBI Act, 1992

Depository Participant: Is an agent of the depository and is authorized to offer depository services to the investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbroker’s etc. can become DP of a depository

Electronic Public Offering (EPO): An initial public offering, or new issue of shares, in which the process of applying for shares is handled electronically (via Website).
Initial Public Offering (IPO): The first offering of a company’s shares to the public. The shares offered may be existing ones held privately, or the company may issue new shares to the public.

Inter Depository Transfers: Inter depository transfer means transfer of securities, which are admitted, for demat on both the depositories from an account held in one depository to an account held in the other depository.

ISIN: Means International Securities Identification Number (ISIN) is a code that uniquely identifies a specific security, which is allocated at the time of admitting the same in the depository system.

Issue: means the number of shares of a company on sale to the public at a given time.

Issue Price: means the price at which a company’s shares are offered to the market for the first time. When they begin to be traded, the market price may be above or below the issue price

IRF: Invocation Request Form

PAN: means Permanent Account Number issued by Income Tax Department

RRF: Rematerialisation Request Form.
Registrar and Transfer Agent (RTA) : Means a registrar to an issue of any securities and/or a transfer agent in respect of any securities appointed by the Issuer on its behalf who has been granted the certificate of registration by the Securities and Exchange Board of India under Sub-section(l) of Section 12 of the Securities and Exchange Board of India Act, 1992

Transferability of Shares: Shares in a company are freely transferable, subject to certain conditions, such that no shareholder is permanently or necessarily wedded to a company. When a member transfers his shares to another person. The transferee steps into the shoes of the transferor and acquires all rights of the transferor in respect of those shares. For dematerialized shares the DP debits and credits the account of the BO with an authorization from such BO

Zero balance: Also known as nil balance, a situation when a depository account has no securities in it. A BO account may be opened with any DP even with zero balance
0