NISM Series VI (Depository Operations) cheat sheet

Depository: entity holding securities in dematerialised (electronic) form and providing services through Depository Participants (DPs); India has two - NSDL (1996) and CDSL (1999), both regulated by SEBI under the Depositories Act, 1996.

Key participants and their roles: issuer/company (register of members), Registrar and Transfer Agent (RTA, maintains records for issuer), DP (interface with investor), and depository (holds securities in fungible bulk in the name of the depository).

Dematerialisation flow: investor submits DRF (Dematerialisation Request Form) with physical certificates to DP → DP verifies and enters request in system → RTA confirms → certificates destroyed → credit to investor's demat account. Certificate must be defaced/marked 'surrendered for demat' where required.

Rematerialisation flow: investor submits RRF (Rematerialisation Request Form) → DP enters request → RTA prints certificates and dispatches → debit from demat account. Remat converts electronic holdings back to physical form.

Account types: Beneficial Owner (BO) account for individuals/entities holding securities; Clearing Member (CM) account for settlement of trades; Pool account of CM for pay-in/pay-out; DP's own account is prohibited from holding client securities.

KYC and account opening: PAN is mandatory for BO accounts (except certain exempt categories), plus proof of identity/address, photograph, and signed account opening form; in-person verification (IPV) by DP is required; UCC (Unique Client Code) maps to PAN.

Transmission (on death of holder): Nomination registered in demat account; on death, nominee or legal heir submits transmission request with death certificate, notarised/affidavit succession documents, and KYC of claimant; DP processes after verification.

Pledge/hypothecation: securities in demat can be pledged in favour of a pledgee (bank/NBFC) by submitting pledge creation form signed by both parties; pledge is recorded by DP; on repayment, pledge closure form releases the securities. Pledgee can invoke pledge on default.

Corporate actions credited by depository/RTA: bonus, stock split, rights (via RTA/DP), dividend (to bank account registered), and mergers - all reflected in the demat account without physical movement; investor must keep bank and address details updated.

Settlement of trades: T+1 rolling settlement in Indian equity markets (SEBI mandated); pay-in of securities by sellers to CM pool account, pay-out to buyers' demat accounts, done via depository system between CM and BO accounts.

Off-market transfer: transfer of securities between two demat accounts without an exchange trade; executed via Delivery Instruction Slip (DIS) with off-market instruction; requires consideration and stamp duty where applicable.

Delivery Instruction Slip (DIS): signed by account holder(s), contains ISIN, quantity, target account (CM/BO), and execution date; DP must act on written instruction; a 'one-time' or standing instruction (SI) can be given for periodic transfers.

ISIN (International Securities Identification Number): 12-character unique identifier for each security issue; demat holdings are tracked by ISIN, not by certificate numbers; ISIN changes on corporate actions like mergers/stock splits.

Nomination: optional facility for BO accounts; investor can nominate up to a specified number of nominees with share percentages; nomination can be changed or cancelled anytime; nomination does not override a valid will.

Freezing of account: DP can freeze a demat account on investor request or on regulatory/legal order; frozen accounts cannot debit securities; 'freeze' can be partial (specific ISINs) or full.

DP grievances and SEBI SCORES: complaints against DP first to DP's grievance cell, then to depository's investor grievance redressal, then SEBI SCORES; SEBI (Intermediaries) Regulations and Depositories Act govern penalties and arbitration.

Charges: account opening, annual maintenance (AMC), demat/remat charges, pledge charges, and transaction charges - SEBI has capped certain charges; DPs must disclose tariff to clients; no charge for basic services beyond prescribed limits.

Record keeping: DP must maintain records of all instructions, KYC, and transactions for a minimum period (8 years under SEBI/PMLA norms); audit by depository and SEBI inspections apply.

Depositories Act, 1996: provides legal framework for dematerialised securities; securities in demat form are fungible and held in the name of the depository; a beneficial owner has all rights of a registered holder.

SEBI (Depositories and Participants) Regulations, 2018: prescribe eligibility, registration, net worth, code of conduct, and operational norms for depositories and DPs.

Registration of DP: applicant must be a SEBI-registered intermediary (or eligible entity), meet net worth requirements, obtain Certificate of Registration from SEBI, and be admitted as a DP by the depository.

Net worth and capital adequacy: DPs must maintain minimum net worth as prescribed (e.g., ₹50 lakh for a DP, higher for self-clearing); shortfall must be reported to SEBI and depository.

Code of conduct for DPs: act in client's best interest, maintain confidentiality, avoid conflicts, execute instructions promptly, and disclose charges; violation attracts penalties and suspension.

Investor protection: SEBI's 'ring-fencing' of client securities - DP cannot use client securities for its own benefit; client assets segregated from DP's own assets; no lien on client securities except as permitted.

Basic Service Demat Account (BSDA): low-cost demat account for small investors with no AMC up to specified holding value (₹2 lakh as per SEBI); introduced to widen retail participation.

Grievance and arbitration: disputes between DP and client may be referred to arbitration under the depository's bye-laws; investor can also approach SEBI or the depository's grievance redressal committee.

Inspection and audit: depository conducts periodic inspection of DPs; SEBI can inspect depositories and DPs; non-compliance can lead to warning, penalty, suspension, or cancellation of registration.

Eligibility for demat: individual (single/joint), HUF, company, partnership firm, trust, bank, FII/FPI, and NRIs (with specific documentation); joint holders have 'either or survivor' or 'jointly' operating instructions.

Joint account operation modes: 'Jointly' - all holders sign; 'Either or Survivor' - any one signs while all alive, survivor operates after death; 'Former or Survivor' - first holder operates; 'Anyone or Survivor' - any holder operates.

Minor account: opened by guardian; minor becomes major on attaining 18; on becoming major, guardian must submit fresh KYC and the minor must re-register the account; no trading until major status confirmed.

NRI demat account: requires PIS (Portfolio Investment Scheme) linkage for repatriation; NRE/NRO bank account mapping; FEMA compliance; DP must verify RBI/SEBI guidelines before crediting proceeds.

Account closure: BO submits closure request; all holdings must be nil or transferred/rematerialised first; DP closes account and reports to depository; closure within prescribed time after request.

Change of address/name/signature: submit request with supporting documents (e.g., gazette notification for name change, address proof); DP verifies and updates; changes reflected after depository update cycle.

Standing Instruction (SI): pre-authorised instruction to transfer securities automatically on pay-out from CM pool to BO account; helps investors avoid missed pay-outs; SI can be cancelled anytime by BO.

Transaction statement: DP provides periodic statement (monthly/quarterly) of holdings and transactions; investor should reconcile with trade confirmations; discrepancy must be reported immediately to DP.

Power of Attorney (PoA): if given to DP/broker, must be specific, registered, and limited in scope; SEBI requires PoA to be disclosed and cannot be used for off-market transfers without specific authorisation.

Pledge vs hypothecation: pledge requires delivery of securities to pledgee's account (or pledge marking); hypothecation does not transfer possession; both are recorded in demat system with pledgee's consent.

Invocation of pledge: on default, pledgee submits invocation request; DP transfers securities to pledgee's account after verification; pledgee must follow due process and notice requirements.

Lien: DP may place lien on securities only per client instruction or regulatory/legal order (e.g., court attachment); lien restricts debit until released; investor must be informed.

Transmission vs transfer: transmission is by operation of law (death, insolvency, lunacy) and does not require consideration; transfer is a voluntary transaction (sale/gift) requiring DIS and consideration/stamp duty.

Nomination vs will: nomination is a facility to ease transmission; a valid will prevails over nomination if it clearly bequeaths the securities; legal heirs may contest; DP follows depository/legal process.

Corporate action - bonus and split: bonus shares and split-adjusted quantities are credited automatically to demat accounts by RTA/depository; investor need not apply; ISIN may change on split/consolidation.

Rights issue: investor must apply via ASBA (Application Supported by Blocked Amount) or through RTA; rights entitlement credited to demat account; renunciation possible; non-application lapses entitlement.

Buy-back and open offer: securities accepted are debited from demat account and consideration credited to registered bank account; investor must respond within offer window; DP facilitates debit on acceptance.

Dividend and interest: credited to bank account registered with DP/RTA; investor must keep bank mandate updated; unclaimed amounts go to IEPF after seven years.

Settlement cycle: T+1 for equities; pay-in by sellers on T+1 morning, pay-out to buyers by T+1 end; failure to deliver results in short delivery and close-out at higher of highest price or 20% above settlement price.

Auction/short delivery: securities not delivered are auctioned by the exchange; defaulting seller bears price difference; depository facilitates transfer of auctioned securities to buyer.

Clearing corporation and CM accounts: CMs maintain pool accounts with DP; pay-in debits CM pool, pay-out credits buyer BO accounts via CM; CMs must reconcile pool accounts daily.

ASBA: application for public issues/IPOs where investor's bank account is blocked until allotment; on allotment, amount debited and securities credited to demat; on non-allotment, amount unblocked - investor must have demat account.

e-IPO and UPI mechanism: retail investors can apply via UPI with blocked amount; allotment credited to demat; refunds unblocked; DP/RTA coordinate with registrar.

Depository system and NSDL/CDSL interoperability: SEBI mandated interoperability between depositories (2021) so investors can transfer securities between NSDL and CDSL accounts; DPs must support inter-depository transfers.

SMS/email alerts: depositories/DPs must send alerts for debit/credit transactions, pledge, and account changes to registered mobile/email; investor must report unauthorised debits immediately.

SEBI circulars on demat charges: no charges for opening a demat account, and AMC capped for BSDA; DPs must display charges; excess charges refundable.

Cyber security and fraud prevention: DPs must implement SEBI cybersecurity framework, two-factor authentication for login, and report incidents; investors should never share OTP/passwords.

Depository vs bank: depository holds securities (not cash); cash settlement is via banking system; demat account is not a bank account; securities are held in fungible bulk, not in investor's name at depository level.

Fungibility: dematerialised securities of the same ISIN are interchangeable; investor's entitlement is quantity, not specific certificate numbers; this enables easy transfer and settlement.

Beneficial owner rights: BO has rights to dividends, bonus, voting (via e-voting), and can transfer/pledge; depository is the registered holder but BO is the beneficial owner under the Act.

Reconciliation: DP must reconcile holdings with depository records daily; discrepancies must be investigated and reported; investor should verify holdings via statement and depository's online portal.

Investor grievances - common issues: unauthorised debit, non-receipt of statement, delay in demat/remat, pledge disputes; escalation to SEBI SCORES and depository ombudsman.

Depository Ombudsman: SEBI-mandated dispute resolution mechanism for depository-related complaints; investor can file online; award binding on DP if accepted.

Data privacy: DP must protect client data under SEBI and IT Act; KYC data shared only as permitted; investor consent needed for sharing with third parties.

Demat of physical certificates - rejection reasons: signature mismatch, certificate defaced, name mismatch, court order, or duplicate certificates; investor must rectify and resubmit.

Record date and corporate actions: RTA fixes record date; holders on record date (based on demat holdings) receive benefits; investor must ensure holdings are in demat before record date for entitlements.

SEBI (Depositories and Participants) Regulations, 2018 - key obligations: fit and proper criteria, code of conduct, segregation of client securities, and grievance redressal; DPs must report material changes to SEBI.

PMLA/AML: DPs are reporting entities under PMLA; must conduct CDD (customer due diligence), monitor suspicious transactions, and file STRs with FIU-IND; record retention for 5 years after transaction.

KYC norms: PAN mandatory; Aadhaar-based e-KYC permitted with consent; in-person verification (IPV) by DP; periodic KYC updation based on risk category (high/medium/low).

SEBI's 'one investor - one demat' not mandatory; investors can hold multiple demat accounts with different DPs; but PAN-linked UCC ensures traceability.

Nomination and transmission - SEBI circulars: nomination optional; transmission without nomination requires legal heir documents; DP must process within prescribed timelines (e.g., 7 days for verification).

Investor Charter: SEBI mandates DPs to publish an Investor Charter with services, timelines, and grievance escalation; displayed on DP website and given to clients.

Fees and charges disclosure: DPs must disclose all charges upfront in the account opening form; changes require prior notice; no hidden charges; SEBI caps certain charges.

Inspection findings: SEBI/depository inspections check KYC compliance, segregation, record keeping, grievance handling, and cybersecurity; penalties for violations including suspension.

Depository participant registration: valid for 5 years, renewable; SEBI can cancel/suspend for violations; DP must maintain net worth and comply with continuing registration conditions.

Investor education: SEBI and depositories run awareness programs on demat benefits, safe practices, and grievance redressal; investors should verify DP registration on SEBI/depository website.

Safe practices: never sign blank DIS, never share login credentials/OTP, verify transaction alerts, keep contact details updated, and review statements regularly.

Common frauds: unauthorised transfer via forged DIS, phishing, and DP employee fraud; investors should report immediately to DP, depository, and cyber police; DP liable for negligence.

Demat account vs trading account: trading account with broker executes trades; demat account with DP holds securities; both are linked via CM pool for settlement; investor needs both to trade.

Off-market gift: transfer of securities as gift requires DIS with 'gift' instruction, stamp duty (where applicable), and supporting documents; tax implications under Income Tax Act.

Inheritance and transmission documents: death certificate, affidavit, indemnity bond, and KYC of legal heirs; DP verifies and updates holdings; nomination simplifies the process.

Depository system benefits: no bad delivery, no stamp duty on transfer in demat, faster settlement, easy pledge, and reduced paperwork; physical transfer attracts stamp duty.

Record date vs book closure: record date is set by company for corporate actions; book closure is period when register is closed; demat holders need not surrender certificates for corporate actions.

Investor protection fund: stock exchange IPF covers certain defaults; depository has grievance redressal and ombudsman; SEBI SCORES provides online complaint tracking.

Account opening process: submit account opening form, PAN, address proof, photograph, and bank details; DP does IPV, verifies KYC, and opens account; account number and DP ID/Client ID issued.

DP ID and Client ID: unique identifiers for demat account; DP ID identifies the DP, Client ID identifies the investor; both needed for transactions and statements.

DIS execution rules: DIS must be signed by all holders as per mode of operation; DP verifies signature; instruction can be given in physical or electronic form (e-DIS); time-stamped.

e-DIS: electronic delivery instruction via depository's online system with OTP authentication; faster and secure; investor must register mobile/email for OTP.

Pledge creation process: pledgor and pledgee submit form; DP records pledge; securities remain in pledgor's account but marked as pledged; pledgee cannot transfer until invocation.

Pledge closure: on repayment, both parties submit closure request; DP releases pledge; securities become free; investor should verify release in statement.

Rematerialisation timeline: RRF processed, RTA prints certificates, dispatched within prescribed period; investor should track and report non-receipt.

Demat rejection and re-submission: if DRF rejected, DP informs investor with reasons; investor rectifies and resubmits; certificates returned if rejected.

Investor rights on corporate actions: bonus/split credited automatically; rights require application; dividend to bank account; investor must respond within timelines for buy-back/open offer.

Depository charges: transaction charges per debit, demat/remat charges per certificate, pledge charges, and AMC; SEBI mandates free account opening and capped BSDA AMC; charges disclosed in tariff sheet.

Payment of charges: via bank account; DP cannot debit demat account for charges; investor should obtain receipt; disputes on charges escalated to DP/depository.

Account statement frequency: monthly if transactions; quarterly otherwise; investor can request statement anytime; charges for additional statements may apply.

Reconciliation with broker: investor should match contract notes with demat debits/credits; discrepancies reported within prescribed time; broker/DP responsible for errors.

SEBI's 'Investor Charter' timelines: account opening, demat, remat, transmission, and grievance resolution have prescribed timelines; non-compliance escalates to SEBI.

Depository participant audit: internal audit and depository inspection; findings on KYC, segregation, and record keeping; penalties for non-compliance.

Cyber security framework: SEBI mandates DPs to have SOC, incident reporting, and periodic VAPT; investor data protection; breach reporting to SEBI/depository.

Investor awareness: SEBI's 'Investor Education and Protection Fund' (IEPF) and depository awareness programs; investors should verify DP registration and read Investor Charter.

Depository ombudsman: SEBI's dispute resolution for depository complaints; file online with documents; award binding; investor can appeal to SEBI.

Demat account nomination: optional; investor can nominate one or more nominees with percentage; nomination can be changed anytime; nomination does not override will; nominee is trustee for legal heirs.

Transmission process: claimant submits death certificate, KYC, affidavit, indemnity bond, and NOC from other heirs (if applicable); DP verifies and updates holdings; timeline prescribed by SEBI.

Transmission without nomination: legal heirs submit succession certificate/probate/will; DP verifies; process may take longer; legal disputes resolved by court.

Joint account transmission: on death of one holder, survivor(s) continue; mode of operation determines; 'either or survivor' simplifies; 'jointly' requires all signatures.

Minor account transmission: on death of guardian, new guardian appointed by court; DP updates; minor's account operated by guardian until majority.

Nomination for joint accounts: nomination applies to all holders; nominee receives securities on death of all holders; if one survives, survivor continues.

SEBI circular on transmission: DPs must process transmission within 7 days of receipt of complete documents; delay escalates to depository/SEBI.

Investor grievance on transmission: common issues - delay, document rejection, disputes among heirs; escalate to DP grievance cell, depository, SEBI SCORES, ombudsman.

Record keeping for transmission: DP maintains documents for prescribed period; investor should keep copies; legal heirs should obtain NOC from other heirs to avoid disputes.

Depository system in India: NSDL and CDSL; both regulated by SEBI; DPs are agents of depository; investor opens account with DP, not directly with depository.

Depository vs custodian: custodian holds securities for institutional clients; DP for retail; both demat; custodians are SEBI-registered and may act as DP.

Foreign portfolio investors (FPIs): demat account with designated depository participant (DDP); FPI registration with SEBI; PIS for repatriation; FEMA compliance.

Mutual funds and demat: MF units can be held in demat form; investor can convert physical units to demat; redemption via DP/RTA; NSDL/CDSL both support MF demat.

Government securities and demat: G-secs held in demat with RBI's SGL/CSGL or depository; retail investors can hold G-secs in demat; interest credited to bank account.

Corporate bonds and demat: listed bonds held in demat; interest and redemption to bank account; investor should verify ISIN and credit.

Depository receipts (ADR/GDR): underlying shares held by depository/custodian; investor holds DRs; conversion and cancellation process; FEMA compliance.

ESOP and demat: shares allotted under ESOP credited to demat; investor must have demat account; tax implications on perquisite and sale.

Investor education on demat: SEBI and depositories provide FAQs, videos, and helplines; investors should verify DP registration and read Investor Charter.

SEBI (Depositories and Participants) Regulations, 2018 - eligibility for DP: applicant must be a SEBI-registered intermediary (stock broker, merchant banker, etc.) or eligible entity; net worth ₹50 lakh; fit and proper.

Registration process: application to SEBI via depository; SEBI grants certificate of registration; DP admitted by depository; validity 5 years; renewal before expiry.

Code of conduct: DP must act honestly, maintain confidentiality, avoid conflicts, execute instructions promptly, disclose charges, and not misuse client securities.

Segregation of client securities: DP must hold client securities separately from own; no commingling; client securities cannot be used for DP's obligations; ring-fencing enforced by SEBI.

Net worth requirement: ₹50 lakh for DP; higher for self-clearing; shortfall reported to SEBI/depository; net worth maintained at all times.

Inspection by depository: periodic inspection of DP records, KYC, segregation, grievance handling; findings reported to SEBI; penalties for violations.

SEBI inspection of depository: checks governance, systems, investor protection; penalties for non-compliance; SEBI can suspend/cancel registration.

Investor protection: SEBI's 'Investor Charter' and SCORES; depository ombudsman; grievance redressal committees; investor can escalate to SEBI.

Penalties: warning, fine, suspension, cancellation of registration; SEBI publishes orders; investors can check DP registration status on SEBI website.

KYC for demat: PAN mandatory; address proof (Aadhaar, passport, etc.); photograph; bank details; IPV by DP; e-KYC with Aadhaar and OTP permitted; periodic updation based on risk.

PMLA compliance: DPs are reporting entities; CDD, enhanced due diligence for high-risk clients; monitor transactions; file STRs with FIU-IND; record retention 5 years.

Beneficial ownership: DPs must identify beneficial owners for non-individual accounts (companies, trusts); maintain records; report to FIU-IND if suspicious.

KYC for NRI: passport, visa, overseas address proof, PIS permission; NRE/NRO bank account; FEMA compliance; DP verifies before account opening.

KYC for minor: guardian's KYC; minor's birth certificate; photograph; on majority, fresh KYC by minor; account re-registered.

KYC for HUF: PAN of HUF; Karta's KYC; HUF deed; photograph; DP verifies; account operated by Karta.

KYC for company: certificate of incorporation, MOA/AOA, board resolution, authorized signatory KYC, beneficial ownership; DP verifies.

KYC for trust: trust deed, registration certificate, trustee KYC, resolution; DP verifies; account operated by trustees.

Periodic KYC updation: high-risk every 2 years, medium every 8 years, low every 10 years (as per PMLA); DP must update; non-compliance can freeze account.

Demat account charges: account opening free (SEBI mandate); AMC capped for BSDA (₹0 up to ₹2 lakh holding value); transaction charges per debit; demat/remat charges per certificate; pledge charges.

BSDA eligibility: holding value up to ₹2 lakh; no AMC; investor can opt for BSDA; if holding exceeds ₹2 lakh, converted to regular account with AMC.

Payment of charges: via bank account; DP cannot debit demat account; investor should obtain receipt; disputes escalated to DP/depository.

SEBI circular on charges: DPs must display tariff on website; no hidden charges; changes with prior notice; excess charges refundable.

Account statement: monthly if transactions; quarterly otherwise; investor can request anytime; charges for additional statements may apply.

Reconciliation: investor should match contract notes with demat debits/credits; discrepancies reported within prescribed time; broker/DP responsible for errors.

Investor Charter timelines: account opening, demat, remat, transmission, grievance resolution have prescribed timelines; non-compliance escalates to SEBI.

Grievance redressal: DP grievance cell → depository → SEBI SCORES → ombudsman; investor can track complaint online; award binding.

Investor education: SEBI and depositories provide FAQs, videos, helplines; investors should verify DP registration and read Investor Charter.

Depository system benefits: no bad delivery, no stamp duty on transfer in demat, faster settlement, easy pledge, reduced paperwork; physical transfer attracts stamp duty.

Demat vs physical: demat securities are fungible; physical certificates have unique numbers; demat transfer is electronic; physical transfer requires endorsement and delivery.

Record date vs book closure: record date set by company for corporate actions; book closure is period when register is closed; demat holders need not surrender certificates for corporate actions.

Corporate action - dividend: credited to bank account registered with DP/RTA; investor must keep bank mandate updated; unclaimed amounts go to IEPF after 7 years.

Corporate action - bonus: bonus shares credited automatically to demat; no application needed; ISIN may change; investor should verify credit.

Corporate action - split: quantity adjusted automatically; ISIN may change; investor should verify holdings; no action needed.

Corporate action - rights: rights entitlement credited; investor must apply via ASBA or RTA; renunciation possible; non-application lapses entitlement.

Corporate action - buy-back: investor must respond within offer window; securities debited on acceptance; consideration credited to bank account.

Corporate action - merger/demerger: new shares credited; old shares debited; ISIN changes; investor should verify and update records.

Settlement cycle T+1: pay-in by sellers on T+1 morning; pay-out to buyers by T+1 end; failure results in short delivery and close-out at higher of highest price or 20% above settlement price.

Auction: securities not delivered are auctioned by exchange; defaulting seller bears price difference; depository facilitates transfer to buyer.

Clearing member pool account: CM maintains pool with DP; pay-in debits pool; pay-out credits buyer BO via CM; CMs reconcile daily.

ASBA: application for public issues; bank account blocked until allotment; on allotment, amount debited and securities credited; on non-allotment, unblocked; investor needs demat account.

e-IPO and UPI: retail investors apply via UPI with blocked amount; allotment credited to demat; refunds unblocked; DP/RTA coordinate with registrar.

Interoperability: SEBI mandated interoperability between NSDL and CDSL (2021); investors can transfer securities between depositories; DPs must support inter-depository transfers.

SMS/email alerts: depositories/DPs must send alerts for debit/credit, pledge, and account changes; investor must report unauthorised debits immediately.

SEBI circular on demat charges: no charges for opening; AMC capped for BSDA; DPs must display charges; excess charges refundable.

Cyber security: DPs must implement SEBI cybersecurity framework, two-factor authentication, and report incidents; investors should never share OTP/passwords.

Depository vs bank: depository holds securities (not cash); cash settlement via banking system; demat account is not a bank account; securities held in fungible bulk, not in investor's name at depository level.

Fungibility: dematerialised securities of same ISIN are interchangeable; investor's entitlement is quantity, not specific certificate numbers; enables easy transfer and settlement.

Beneficial owner rights: BO has rights to dividends, bonus, voting (via e-voting), and can transfer/pledge; depository is registered holder but BO is beneficial owner under the Act.

Reconciliation: DP must reconcile holdings with depository records daily; discrepancies investigated and reported; investor should verify holdings via statement and depository's online portal.

Investor grievances - common issues: unauthorised debit, non-receipt of statement, delay in demat/remat, pledge disputes; escalation to SEBI SCORES and depository ombudsman.

Depository Ombudsman: SEBI-mandated dispute resolution for depository complaints; investor can file online; award binding on DP if accepted.

Data privacy: DP must protect client data under SEBI and IT Act; KYC data shared only as permitted; investor consent needed for sharing with third parties.

Demat of physical certificates - rejection reasons: signature mismatch, certificate defaced, name mismatch, court order, duplicate certificates; investor must rectify and resubmit.

Record date and corporate actions: RTA fixes record date; holders on record date (based on demat holdings) receive benefits; investor must ensure holdings are in demat before record date for entitlements.

SEBI (Depositories and Participants) Regulations, 2018 - key obligations: fit and proper criteria, code of conduct, segregation of client securities, grievance redressal; DPs must report material changes to SEBI.

PMLA/AML: DPs are reporting entities under PMLA; must conduct CDD, monitor suspicious transactions, file STRs with FIU-IND; record retention 5 years after transaction.

KYC norms: PAN mandatory; Aadhaar-based e-KYC permitted with consent; IPV by DP; periodic KYC updation based on risk category (high/medium/low).

SEBI's 'one investor - one demat' not mandatory; investors can hold multiple demat accounts with different DPs; PAN-linked UCC ensures traceability.

Nomination and transmission - SEBI circulars: nomination optional; transmission without nomination requires legal heir documents; DP must process within prescribed timelines (e.g., 7 days for verification).

Investor Charter: SEBI mandates DPs to publish an Investor Charter with services, timelines, and grievance escalation; displayed on DP website and given to clients.

Fees and charges disclosure: DPs must disclose all charges upfront in account opening form; changes require prior notice; no hidden charges; SEBI caps certain charges.

Inspection findings: SEBI/depository inspections check KYC compliance, segregation, record keeping, grievance handling, and cybersecurity; penalties for violations including suspension.

Depository participant registration: valid for 5 years, renewable; SEBI can cancel/suspend for violations; DP must maintain net worth and comply with continuing registration conditions.

Investor education: SEBI and depositories run awareness programs on demat benefits, safe practices, and grievance redressal; investors should verify DP registration on SEBI/depository website.

Safe practices: never sign blank DIS, never share login credentials/OTP, verify transaction alerts, keep contact details updated, and review statements regularly.

Common frauds: unauthorised transfer via forged DIS, phishing, and DP employee fraud; investors should report immediately to DP, depository, and cyber police; DP liable for negligence.

Demat account vs trading account: trading account with broker executes trades; demat account with DP holds securities; both linked via CM pool for settlement; investor needs both to trade.

Off-market gift: transfer of securities as gift requires DIS with 'gift' instruction, stamp duty (where applicable), and supporting documents; tax implications under Income Tax Act.

Inheritance and transmission documents: death certificate, affidavit, indemnity bond, and KYC of legal heirs; DP verifies and updates holdings; nomination simplifies the process.

Depository system benefits: no bad delivery, no stamp duty on transfer in demat, faster settlement, easy pledge, and reduced paperwork; physical transfer attracts stamp duty.

Record date vs book closure: record date is set by company for corporate actions; book closure is period when register is closed; demat holders need not surrender certificates for corporate actions.

Investor protection fund: stock exchange IPF covers certain defaults; depository has grievance redressal and ombudsman; SEBI SCORES provides online complaint tracking.

Account opening process: submit account opening form, PAN, address proof, photograph, and bank details; DP does IPV, verifies KYC, and opens account; account number and DP ID/Client ID issued.

DP ID and Client ID: unique identifiers for demat account; DP ID identifies the DP, Client ID identifies the investor; both needed for transactions and statements.

DIS execution rules: DIS must be signed by all holders as per mode of operation; DP verifies signature; instruction can be given in physical or electronic form (e-DIS); time-stamped.

e-DIS: electronic delivery instruction via depository's online system with OTP authentication; faster and secure; investor must register mobile/email for OTP.

Pledge creation process: pledgor and pledgee submit form; DP records pledge; securities remain in pledgor's account but marked as pledged; pledgee cannot transfer until invocation.

Pledge closure: on repayment, both parties submit closure request; DP releases pledge; securities become free; investor should verify release in statement.

Rematerialisation timeline: RRF processed, RTA prints certificates, dispatched within prescribed period; investor should track and report non-receipt.

Demat rejection and re-submission: if DRF rejected, DP informs investor with reasons; investor rectifies and resubmits; certificates returned if rejected.

Investor rights on corporate actions: bonus/split credited automatically; rights require application; dividend to bank account; investor must respond within timelines for buy-back/open offer.

Depository charges: transaction charges per debit, demat/remat charges per certificate, pledge charges, and AMC; SEBI mandates free account opening and capped BSDA AMC; charges disclosed in tariff sheet.

Payment of charges: via bank account; DP cannot debit demat account for charges; investor should obtain receipt; disputes on charges escalated to DP/depository.

Account statement frequency: monthly if transactions; quarterly otherwise; investor can request statement anytime; charges for additional statements may apply.

Reconciliation with broker: investor should match contract notes with demat debits/credits; discrepancies reported within prescribed time; broker/DP responsible for errors.

SEBI's 'Investor Charter' timelines: account opening, demat, remat, transmission, and grievance resolution have prescribed timelines; non-compliance escalates to SEBI.

Depository participant audit: internal audit and depository inspection; findings on KYC, segregation, and record keeping; penalties for non-compliance.

Cyber security framework: SEBI mandates DPs to have SOC, incident reporting, and periodic VAPT; investor data protection; breach reporting to SEBI/depository.

Investor awareness: SEBI's 'Investor Education and Protection Fund' (IEPF) and depository awareness programs; investors should verify DP registration and read Investor Charter.

Depository ombudsman: SEBI's dispute resolution for depository complaints; file online with documents; award binding; investor can appeal to SEBI.