CBSE Class 12 Operations of Depository

Read and download CBSE Class 12 Operations of Depository chapter in NCERT book for Class 12 Other Subjects. You can download latest NCERT eBooks for 2021 chapter wise in PDF format free from This Other Subjects textbook for Class 12 is designed by NCERT and is very useful for students. Please also refer to the NCERT solutions for Class 12 Other Subjects to understand the answers of the exercise questions given at the end of this chapter


Chapter 8 Operations of Depository Participants

Learning Objectives:

After reading this chapter, you should be able:

1. To understand meaning and importance of ISIN

2. To understand the importance of dematerialization of securities and the process involved.

3. To understand the process of transfer of shares.

4. To apply the knowledge in real life situation.

Your guide engine to learning:

1. Introduction – Depository System

2. International Securities Identification Number

   1. Securities that can be dematerialized

3. Dematerialization

   1. Meaning

   2. Process of Dematerialization

   3. Benefits of having a demat account

4. Trading and Settlement of dematted shares:

   1. Meaning of transfer of shares

   2. Settlement of off-market Trades

   3. Settlement of Market Trades

5. Rematerialization

8.1 Introduction – Depository System

The earlier settlement system on Indian stock exchanges was very inefficient as it was unable to take care of the transfer of securities in a quick/speedy manner. Since, the securities were in the form of physical certificates; their quick movement was again difficult. This led to settlement delays, theft, forgery, mutilation and bad deliveries  and also to added costs.

To wipeout these problems, the Depositories Act 1996 was passed. It was formed with the purpose of ensuring free transferability of securities with speed, accuracy & security. It has been able to do so by:

a) Making securities of public limited companies freely transferable, subject to certain exceptions;

b) Dematerialising the securities in the depository mode; and

c) Providing for maintenance of ownership records in a book entry form.

For performing the above tasks, two depositories viz, NSDL & CDSL have come up.


National Securities Depository Limited (NSDL) does the above tasks for the trades done on NSE. It is a joint venture of:

- IDBI (Industrial Development Bank of India Limited);

- NSE (National Stock Exchange); and

- UTI (Unit Trust of India).

NSDL is the first depository to be set up in India. It was registered by SEBI on June 7, 1996.

The second depository Central Depository Services Limited (CDSL) has been promoted by Bombay Stock Exchange and Bank of India. It was formed in February 1999. Both depositories have a network of Depository participants (DPs) which are further electronically connected to their clients. So, DPs act as a link between the depositories and the clients.

The Depository system to some extent works like the banking system. There is a

central bank and the rules and regulations related to the working of all the 

commercial, foreign, co-operative and other types of banks are framed by the central bank. In order to do the daily transactions, the investors open an account with the associate banks, and not with the central one. Like an investor can have a bank account with more than one bank, similarly one can have more than one Demat Account. We can further bring out the similarities as well as the differences between the two in understanding the depository system. (See Table 8.1)


Please refer to the link below for - CBSE Class 12 Operations of Depository                              



Click to View or Download pdf file
Click for more Other Subjects Study Material

Latest NCERT & CBSE News

Read the latest news and announcements from NCERT and CBSE below. Important updates relating to your studies which will help you to keep yourself updated with latest happenings in school level education. Keep yourself updated with all latest news and also read articles from teachers which will help you to improve your studies, increase motivation level and promote faster learning

SOF Science Olympiad Foundation

SOF~ The most desired name for Olympiads in the Educational World! SOF” refers to the Science Olympiad Foundation. It is an Academic Institution assisting educational based competition and enhancing competitive spirit among the School- Level students. The Science...

Latest CBSE Syllabus for 2021 2022 PDF Download

Latest Syllabus for Class 12 for 2021 2022 Latest Syllabus for Class 11 for 2021 2022 Latest Syllabus for Class 10 for 2021 2022 Latest Syllabus for Class 9 for 2021 2022 CBSE has issued the latest syllabus for the academic year 2021 2022 which is applicable for all...

ICSE Board Exams Cancelled

The ICSE (Class X) 2021 Examination: Given the present worsening situation of the Covid- 19 Pandemic in the country, the CISCE has decided to CANCEL the ICSE (Class X) 2021 Examination. The options given in the earlier Circular dated 16th April 2021, now stands...

Class 10 Boards Cancelled Class 12 postponed

Looking to the present situation of the pandemic and school closures, and also taking in account the safety and well-being of the students, it is decided as follows:   1. The Board Exams for Class XIIth to be held from May 4th to June, 14th, 2021 are hereby postponed....

SOF IMO International Mathematics Olympiad

SOF IMO refers to the International Mathematics Olympiad organised by SOF, the Science Olympiad Foundation. SOF is the educational foundation involved in the academic upgradation of students. This Olympiad is a maths competitive examination conducted for the aspiring...

CBSE Practical Exams for Class 10 and 12

As per the Scheme of Examination, Practical Examination/Project/Internal Assessment is a compulsory activity which is completed by schools every year. Till last year, the window for Practical Examinations was provided from 1st January to 7th February. However, this...

Studies Today