A STUDY OF DEMATERIALISATION IN BANKING SECTOR

Bachelor of Commerce [Banking and insurance] Semester V (2010-2011)

Submitted by MAULIK.D.SHAH Roll no. 33 Name of the Guide Prof. ASIF BAIG AKHTAR. [Head department of account] GURUKUL COLLEGE OF COMMERCE Tilak Road, Ghatkopar (East), Mumbai -400 077.

A STUDY OF DEMATERIALISATION IN BANKING SECTOR

Bachelor of Commerce Banking & Insurance Sem - V (2010-11) Submitted to Mumbai university In Partial Fulfillment of the requirements for the Award of Degree of Bachelor of Commerce Banking &Insurance Submitted By MAULIK.D.SHAH Roll No. 33 Name of the guide Prof. ASIF BAIG AKHTAR [Head department of account] GURUKUL COLLEGE OF COMMERCE Tilak Road, Ghatkopar (East), Mumbai -400 077.

CERTIFICATE

This is to certify that Mr. MAULIK.D.SHAH of B.Com Banking & Insurance Semester V (2010-11) has successfully completed the project on A STUDY OF DEMATERILISATION IN BANKING SECTOR under the guidance of_Prof.ASIF.BAIG.AKHTAR

Course Co-ordinator Principal

Project Guide / Internal Examiner

External Examiner

DECLARATION

I MR. MAULIK. D. SHAH the student of B.Com. Banking & Insurance Semester V (2010-11) hereby declare that I have completed the Project on A STUDY OF DEMATERILISATION IN BANKING SECTOR

The information submitted is true and original to the best of my knowledge.

Signature of student (Name of student

INDEX

1. INTRODUCTION 2. METHODOLOGY 3. ROLE AND ANALYSIS OF DEMAT A/C 4. PROBLEMS AND LIMITATION OF DEMAT A/C 5. CONCLUSIONS AND SUGGESTIONS 6. BIBLIOGRAPHY

01 - 29 30 - 33 34 - 47

48 - 51

52 - 56

57 - 58

ACKNOWLEDGMENT
I would first like to express my deep sense of gratitude to the almighty that has showered his blessings on me and also my parents without whose support this project would have not been possible.

I would like to thank our principal DR. KSHITIJ. PRABHA for giving us an opportunity to excel ourselves in research field as well.

I have no words to express my deep sense of gratitude to my guide PROF. ASIF BAIG. For his valuable guidance which helped me in restructuring my project.

I would also like to thank our BBI coordinator PROF. NITIN. AGARWAL for his explicit cooperation.

CHAPTER I INTRODUCTION
INTRODUCTION : The equity brokerage industry in India is one of the oldest in the Asia region. India had an active stock market for about 150 years that played a significant role in developing risk markets as also promoting enterprise and supporting the growth of industry. The roots of a stock market in India began in the 1860s during the American Civil War that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance. This trend was akin to the rapid growth of securities markets in Europe and the North America in the background of expansion of railroads and exploration of natural resources and land development. Historical records show that as early as 1864, there were about 1,000 brokers with the stock markets functioning from three places in Mumbai; between 9 am to 7 pm at the junction of Meadows Street and Rampart Row, from day break till 9 am and from 7 pm to early hours of next morning at Bazargate. Share prices rose sharply even at that time. A share of Colaba Land Company during the boom period of the 1860s rose from Rs 10,000 at par to Rs 120,000 and that of Backbay Shares went up from Rs 2,000 to Rs 54,000. Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance companies and 62 joint stock companies. Reports on stock markets around that time indicate that an ordinary broker in 1864 earned about Rs 200 per day, a huge sum in those days. The boom period came to an abrupt end in 1865. In Jul 1865, what was then used to be

called the share mania ended with burst of the stock market bubble? Never had I witnessed in any place a run s of such prosperity thus wrote Richard Temple, who served as the Governor of Bombay at that time. An interesting aspect is that despite the collapse of the stock market, most of the brokers met their payment commitments. In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their own, which later turned into the Dalal Street. A group of about 300 brokers formed the stock exchange in Jul 1875, which led to the formation of a trust in 1887 known as the Native Share and Stock Brokers Association. A unique feature of the stock market development in India was that that it was entirely driven by local enterprise, unlike the banks which during the pre-independence period were owned and run by the British. Following the establishment of the first stock exchange in Mumbai, other stock exchanges came into being in major cities in India, namely Ahmedabad (1894), Calcutta (1908), Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gained from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904 and 1908) etc, at different points of time. The term Demat, in India, refers to a dematerialised account. For individual Indian citizens to trade in listed stocks or debentures. The Securities Exchange Board of India (SEBI) requires the investor to maintain a Demat account. In a demat account shares and securities are held in electronic form instead of taking actual possession of certificates. A Demat Account is opened by the investor while registering with an investment broker (or sub broker). The Demat account number which is quoted for all transactions to enable electronic settlements of trades to take place.
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Access to the demat account requires an internet password and a transaction password as well as initiating and confirming transfers or purchases of securities. Purchases and sales of securities on the Demat account are automatically made once transactions are executed and completed. The term Demat, in India, refers to a dematerialised account. For individual Indian citizens to trade in listed stocks or debentures. The Securities Exchange Board of India (SEBI) requires the investor to maintain a Demat account. In a demat account shares and securities are held in electronic form instead of taking actual possession of certificates. A Demat Account is opened by the investor while registering with an investment broker (or sub broker). The Demat account number which is quoted for all transactions to enable electronic settlements of trades to take place. Access to the demat account requires an internet password and a transaction password as well as initiating and confirming transfers or purchases of securities. Purchases and sales of securities on the Demat account are automatically made once transactions are executed and completed.

Background:
Indian capital market has seen unprecedented boom in its activity in the last 15 years in terms of number of stock exchanges, listed companies, trade volumes, market intermediaries, investor population, etc. However, this surge in activity has brought with it numerous problems that threaten the very survival of the capital markets in the long run, most of which are due to the large volume of paper work involved and paper based trading, clearing and settlement. Until the late eighties, the common man kept away from 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 drowned in shares in the form of paper and hence it was problematic to handle them. Fake and stolen shares, fake signatures and signature mismatch, duplication and mutilation of shares, transfer problems, etc. The investors were scared and were under compensated for the risk borne by them. The century old system of trading and settlement requires handling of huge volumes of paper work. This has made the investors, both retail and institutional, wary of entering the capital market. However, lack of modernization become a hindrance to growth and resulted in creation of cumbersome procedures and paper work.

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However, the real growth and change occurred from mid-eighties in the wake of liberalization initiatives of the Government. The reforms in the that the certificates are the main cause of investors` disputes and arbitration cases. Since the paper work was not matching the rapid growth so there was a need for a 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 better system to ensure removal of these impediments. Government of India decided to set up a fully automated and high technology based model exchange that could offer screen-based trading and depositories as the ultimate answer to all such reforms and eliminate various bottlenecks in the capital market, particularly, the clearing and settlement system in stock exchanges. A depository in very simple terms is a pool of pre-verified shares held in electronic mode which offers settlement of transactions in an efficient and effective way.

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Indian Market Scenario : Indian capital market has seen unprecedented boom in its activity in the last 15 years in terms of number of stock exchanges, listed companies, trade volumes, market intermediaries, investor population, etc. However, this surge in activity has brought with it numerous problems that threaten the very survival of the capital markets in the long run, most of which are due to the large volume of paper work involved and paper based trading, clearing and settlement. Until the late eighties, the common man kept away from 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 drowned in shares in the form of paper and hence it was problematic to handle them. Fake and stolen shares, fake signatures and signature mismatch, duplication and mutilation of shares, transfer problems, etc. The investors were scared and were under compensated for the risk borne by them. The century old system of trading and settlement requires handling of huge volumes of paper work. This has made the investors, both retail and institutional, wary of entering the capital market. However, lack of modernization become a hindrance to growth 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
12

that the certificates are the main cause of investors` disputes and arbitration cases. Since the paper work was not matching the rapid growth so there was a need for a better system to ensure removal of these impediments. Government of India decided to set up a fully automated and high technology based model exchange that could offer screen-based trading and depositories as the ultimate answer to all such reforms and eliminate various bottlenecks in the capital market, particularly, the clearing and settlement system in stock exchanges. A depository in very simple terms is a pool of pre-verified shares held in electronic mode which offers settlement of transactions in an efficient and effective way.

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Beginning of a new equity culture : A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational companies, which created a surge in retail investing. The early 1980s witnessed another surge in stock markets when major companies such as Reliance accessed equity markets for resource mobilization that evinced huge interest from retail investors. A new set of economic and financial sector reforms that began in the early 1990s gave further impetus to the growth of the stock markets in India. As a part of the reform process, it became imperative to strengthen the role of the capital markets that could play an important role in efficient mobilization and allocation of financial resources to the real economy. Towards this end, several measures were taken to streamline the processes and systems including setting up an efficient market infrastructure to enable Indian finance to grow further and mature. The importance of an efficient micro market infrastructure came into focus following the incidence of market abuses in securities and banking markets in 1991 and 2001 that led to extensive investigations by two respective Joint Parliamentary Committees. The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad objectives of the SEBI include To protect the interests of the investors in securities To promote the development of securities markets and to regulate the

securities markets

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The scope and functioning of the SEBI has greatly expanded with the rapid growth of securities markets in India in the last fifteen years. Following the recommendations of the High Powered Study Group on Establishment of New Stock Exchanges, the National Stock Exchange of India (NSE) was promoted by financial institutions with an aim to provide access to investors all over the country. NSE was incorporated in Nov 1992 as a tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were trusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities Contracts (Regulations) Act 1956 in Apr 1993. It commenced operations in wholesale debt segment in Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National Stock Exchange brought to Indian capital markets several innovations and modern practices and procedures such as nationwide trading network, electronic trading, greater transparency in price discovery and process driven operations that had significant bearing on further growth of the stock markets in India. Faster and efficient securities settlement system is an important ingredient of a successful stock market. To speed the securities settlement process, The Depositories Act 1996 was passed that allowed for dematerialisation (and rematerialisation) of securities in depositories and the transfer of securities through electronic book entry. The National Securities Depository Limited (NSDL) set up by leading financial institutions, commenced operations in Oct 1996. Regulations governing selection of various types of market intermediaries as depository participations were made. Subsequently, Central Depository Services (India) Limited promoted by Bombay Stock Exchange and other financial institutions came into being.

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Rapid Growth : The last decade has been exceptionally good for the stock markets in India. In the back of wide ranging reforms in regulation and market practice as also the growing participation of foreign institutional investment, stock markets in India have showed phenomenal growth in the early 1990s. The stock market capitalization in mid-2007 is nearly the same size as that of the gross domestic product as compared to about 25 percent of the latter in the early 2000s. Investor base continued to grow from domestic and international markets. The value of share trading witnessed a sharp jump too. Foreign institutional investment in Indian stock markets showed continuous rise reaching about USD10 bn in each of these years between FY04 to FY06. Stock markets became intensely technology and process driven, giving little scope for manual intervention that has been the source of market abuse in the past. Electronic trading, digital certification, straight through processing, electronic contract notes, online broking have emerged as major trends in technology. Risk management became robust reducing the recurrence of payment defaults. Product expansion took place in a speedy manner. Indian equity markets now offer, in addition to trading in equities, opportunities in trading of derivatives in futures and options in index and stocks. ETFs are showing gradual growth. Within five years of introduction of derivatives, Indian stock markets now are ranked first in stock futures and fourth in index futures. Indian stock markets are transaction intensive and thus rank among the top five markets in this regard. Stock exchange reforms brought in professional management separating conflicts of interest between brokers as owners of the exchanges and traders/dealers. The demutualization and corporatisation of all stock exchanges is nearing completion and the boards

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of the stock exchanges now have majority of independent directors. Foreign institutions took stake in Indias two leading domestic stock exchanges. While NYSE Group led consortium took stake in the National Stock Exchange, Deutsche Borse and Singapore Stock Exchange bought equity in the Bombay Stock Exchange Ltd. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment.

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Depositary participant services : The onset of the technology revolution in financial services Industry saw the emergence of KARVY as an electronic custodian registered with National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998. KARVY set standards enabling further comfort to the investor by promoting paperless trading across the country and emerged as the top 3 Depository Participants in the country in terms of customer serviced. Offering a wide trading platform with a dual membership at both NSDL and CDSL, it is a powerful medium for trading and settlement of dematerialized shares. Karvy has established live DPMs, Internet access to accounts and an easier transaction process in order to offer more convenience to individual and corporate investors. A team of professional and the latest technological expertise allocated exclusively to their Demat division including technological enhancements like SPEED-e; make their response time quick and their delivery impeccable. A wide national network makes their efficiencies accessible to all.

Financial Products Distribution services : The paradigm shift from pure selling to knowledge based selling drives the business today. With our wide portfolio offerings, Karvy occupy all segments in the retail financial services industry. A team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled them to a position among the top distributors for equity and debt issues with an estimated market share of
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15% in terms of applications mobilized, besides being established as the leading procurer in all public issues. Advisory services : Under their retail brand KARVY the Finapolis', it delivers advisory services to a cross-section of customers. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers' portfolios and providing valuable inputs, monitoring and managing the portfolio through varied technological initiatives. This is made possible by the expertise it has gained in the business over the years. Another venture towards being investor-friendly is the circulation of a monthly magazine called KARVY - the Finapolis' covering thlatest of market news, trends, investment schemes and researchbased opinions from experts in various financial fields.

Private client group : This specialized division was set up to cater to the HIGH NET WORTH INDIVIDUAL and institutional clients keeping in mind that they require a different kind of financial planning and management that will augment not just existing finances but there lifestyle as well. Here they follow a hardnosed business approach with the soft touch of dedicated customer care and personalized attention. For this purpose they offer a comprehensive and

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personalized service that encompasses planning and protection of finances, planning of business needs and retirement needs and the host of other services, all provided on a one-to-one basis.

Depositary participant : Although India had a bright capital market which is more than a century old, the paper-based settlement of trades caused substantial problems like bad delivery and delayed transfer of securities. The enactment of Depositories Act in August 1996 paved the way for establishment of National Securities Depository Limited (NSDL), the first depository in India and Central Depository Services (India) Ltd. (CDSL). In a span of about 11 years, investors have switched over to electronic [demat] settlement and National Securities Depository Limited (NSDL) stands at the centre of this change. A "Depository" is a facility for holding securities, which enables securities transactions to be processed by book entry. To achieve this purpose, the depository may immobilize the securities or dematerialize them (so that they exist only as electronic records). India has chosen the dematerialization route. In India, a depository is an organization, which holds the beneficial owner's securities in electronic form, through a registered Depository Participant (DP). A depository functions somewhat similar to a commercial bank. To avail of the services offered by a depository, the investor has to open an account with a registered DP "Dematerialization" is a process by which physical certificates are converted
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into

electronic

form.

Dematerialization of securities occurs when securities issued in physical form are destroyed and an equivalent number of securities are credited into the beneficiary owner's account. India has adopted dematerialization route to depository. In a depository system, the investors stand to gain by way of efficient settlements, lower costs and lower risks of theft or forgery, etc. But the implementation of the system has to be secure and well governed. All the players have to be conversant with the rules and regulations as well as with the technology for processing. The intermediaries in this system have to play strictly by the rules. In the depository system, securities are held in depository accounts, which is more or less similar to holding funds in bank accounts. Transfer of ownership of securities is done through simple account transfers. This method does away with all the risks and hassles normally associated with paperwork. Consequently, the cost of transacting in a depository environment is considerably lower as compared to transacting in certificates.

Depositary participant : The depositories can provide their services to investors through their agents called depository participants. These agents are appointed subject to the conditions prescribed under Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 and other applicable conditions. It may be organisations involved in the business of providing financial services like banks, brokers, custodians, financial institutions, etc.

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National services depositary limited (NSDL) : The enactment of Depositories Act in August 1996 paved the way for establishment of NSDL, the first depository in India. This depository promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialized form in the Indian capital market. Using innovative and flexible technology systems, NSDL works to support the investors and brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness of Indian marketplaces by developing settlement solutions that increase efficiency, minimize risk and reduce costs.. Both agencies are linked with each other. NSDL is a public limited company incorporated under the Companies Act, 1956. Four renowned institutions participate in it. Unit Trust of India (UTI), Industrial Development Bank of India (IDBI), National Stock Exchange of India (NSE), State Bank of India (SBI).UTI is the largest mutual fund of India and IDBI is the largest development bank, NSE is the largest stock exchange of India and SBI is the largest commercial bank of India having clearing facility. HDFC and Citibank also share in this system.[6] NSDL is managed by Board of directors headed by a managing director. It is governed by its bye-laws and its business operations are regulated by business rules. NSDL interfaces with the investors through players or business partners. Constituents of depository compromise of clearing corporation, brokers, clearing member, registrar and transfer agents, company or issuer, stock exchange, bank depository
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participant and investors. All are electronically linked to the main depository for the settlement of trades and to perform a daily reconciliation of all accounts held with NSDL.

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Central depositary services limited (CDSL) : Each and every activity of CDSL stem from the essential reason behind forming this depository, i.e. to encourage India's individual investors to benefit from actively participating in a depository. A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialization of his holdings and transferring securities. The balances in the investors account recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide the investor, at regular intervals, a statement of account which gives the details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of securities. CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank. Second agency is CDSL - Central Depository Service (India) Limited. Main functions of this agency are centralized database and accounting. Major participant in CDSL are LIC, GIC and BSE. This agency is set up with the object to keep in mind to accelerate growth of scripless trading, with major thrust of individual participation and creating competitive environment,
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responsible to the users interests and demands to enhance liquidity. CDSL aims to retain the entire data of the investors in the central database of CDSL. It has opted for it with the following objectives: Within time information is available to issuers/registrars and share transfer agents. Companies can monitor critical holdings, e.g., holding of FIIs and FIs, investment companies, etc., by using up the parameters through their frontend terminals. There is no other database in the system to reconcile. No additional security or storage cost of data or critical database residing at the front-end terminals with the issuers/registrars. Recover only the annual maintenance charges. CDSL signed a memorandum of understanding with NSDL for interdepository connectivity. Presently, more than half the business of depositories is handled by this agency. Role of both these agencies has become very vital after SEBIs declaration that there would be no deals in physical form and only dealing to happen in market through demat accounts.

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Legal framework : The operations of the depositories are primarily governed by the Depositories Act, 1996, Securities and Exchange Board of India (Depositories & Participants) Regulations, 1996, Bye-Laws approved by SEBI, and Business Rules framed in accordance with the Regulations and Bye-Laws. The Depositories Act passed by Parliament received the President's assent on August 10, 1996. It was notified in a Gazette on August 12 of the same year The Act enables the setting up of multiple depositories in the country. This was to see that there is competition in the service and there is more than one depository in operation. At present, two depositories are registered with SEBI - The National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Only a company registered under the Companies Act, 1956 and sponsored by the specified category of institutions can set up a depository in India. Before commencing operations, depositories should obtain a certificate of registration and a certificate of commencement of business from SEBI

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AXIS Demat Account Charges: Axis bank is a registered member of the depository participant of the NSDL. This bank provides advanced facilities like fast and easy transfer of shares and settlements, quick receiving of corporate benefits receipt, auto email service, i-connect depository services and many more. Axis demat account charges are scheduled on beneficiary account of retail investor. Following are the charges of the respective type of account: No costs are applicable for the Axis demat account charges for opening purpose. No charges are applicable for closing the account. The demat account charges, for maintenance, Rs 500 for customer authorizing and maintaining the account with axis bank. Rs 2500 for a customer who has no authorized bank to debit. Demat charges applicable are Rs 5 per certificate subject to a minimum of Rs 50 per request. Demat charges are recovered through monthly bill. Applicable remat charges are Rs. 20 for every 100 securities or Rs. 50 per request whichever is the higher. Remat charges will be recovered through monthly bill. The Axis bank demat account charges for debit transactions 0.04% i.e. minimum Rs 20 per instruction. Selling transaction charges are to send through monthly bills. Failed or rejected instructions are charged Rs 10 per instruction. The bills are sent monthly. Ad hoc statements are to be charged Rs 100 and charges recovered upfront. This bank charges for pledge creation Rs 25 per instruction i.e. 0.04%,
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recovered through monthly bill. Pledge closure charges are minimum Rs 50 per instruction at 0.04%, recovered through monthly bill. Pledge invocation charges are minimum Rs 50 per instruction at 0.04%, which is also recovered through monthly bill. The above mentioned Axis demat account charges are inclusive of NSDL charges.

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Opening an account: Steps involved in opening a demat account First an investor has to approach a DP and fill up an account opening form. The account opening form must be supported by copies of any one of the approved documents to serve as proof of identity (POI) and proof of address (POA) as specified by SEBI. Besides, production of PAN card in original at the time of opening of account has been made mandatory effective from April 1, 2006. All applicants should carry original documents for verification by an authorized official of the depository participant, under his signature. Further, the investor has to sign an agreement with DP in a depository prescribed standard format, which details rights and duties of investor and DP. DP should provide the investor with a copy of the agreement and schedule of charges for their future reference. The DP will open the account in the system and give an account number, which is also called BO ID (Beneficiary Owner Identification number). The DP may revise the charges by giving 30 days notice in advance. SEBI has rationalized the cost structure for dematerialization by removing account opening charges, transaction charges for credit of securities, and custody charges vide circular dated January 28, 2005. Further, SEBI has vide circular dated November 9, 2005 advised that with effect from January 9, 2006, no charges shall be levied by a depository on DP and consequently, by a DP on a Beneficiary Owner (BO) when a BO transfers all the securities lying in his account to another branch of the same DP or to another DP of the same depository or another depository, provided the BO Account/s at transferee DP and at transferor DP are one and the same, i.e. identical in all respects. In case the BO Account at transferor DP is

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a joint account, the BO Account at transferee DP should also be a joint account in the same sequence of ownership.

Fees Involved There are four major charges usually levied on a demat account: Account opening fee, annual maintenance fee, custodian fee and transaction fee. All the charges vary from DP to DP. Account-opening fee Depending on the DP, there may or may not be an opening account fee. Private banks, such as HDFC Bank and UTI Bank, do not have one. However, players such as ICICI Bank, Globe Capital, Karvy Consultants and the State Bank of India to do so. But most players levy this when you reopen a demat account, though the Stock Holding Corporation offers a lifetime account opening fee, which allows you to hold on to your demat account over a long period. This fee is refundable. Annual maintenance fee This is also known as folio maintenance charges, and is generally levied in advance. Custodian fee This fee is charged monthly and depends on the number of securities (international securities identification numbers ISIN) held in the account. It generally ranges between Rs 0.5 to Rs 1 per ISIN per month. DPs will not
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charge custody fee for ISIN on which the companies have paid one-time custody charges to the depository.

Transaction fee The transaction fee is charged for crediting/debiting securities to and from the account on a monthly basis. While some DPs, such as SBI, charge a flat fee per transaction, HDFC Bank and ICICI Bank peg the fee to the transaction value, subject to a minimum amount. The fee also differs based on the kind of transaction (buying or selling). Some DPs charge only for debiting the securities while others charge for both. The DPs also charge if your instruction to buy/sell fails or is rejected. In addition, service tax is also charged by the DPs. In addition to the other fees, the DP also charges a fee for converting the shares from the physical to the electronic form or vice-versa. This fee varies for both demat and remat requests. For demat, some DPs charge a flat fee per request in addition to the variable fee per certificate, while others charge only the variable fee. For instance, Stock Holding Corporation charges Rs 25 as the request fee and Rs 3 per certificate as the variable fee. However, SBI charges only the variable fee, which is Rs 3 per certificate. Remat requests also have charges akin to that of demat. However, variable charges for remat are generally higher than demat. Some of the additional features (usually offered by banks) are as follows. Some DPs offer a frequent trader account, where they charge frequent traders at lower rates than the standard charges. Demat
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account holders are generally required to pay the DP an advance fee for each account which will be adjusted against the various service charges. The account holder needs to raise the balance when it falls below a certain amount prescribed by the DP. However, if you also hold a savings account with the DP you can provide a debit authorization to the DP for paying this charge. Finally, once you choose your DP, it will be prudent to keep all your accounts with that DP, so that tracking your capital gains liability is easier. This is because, for calculating capital gains tax, the period of holding will be determined by the DP and different DPs follow different methods. For instance, ICICI Bank uses the first in first out (FIFO) method to compute the period of holding. The proof of the cost of acquisition will be the contract note. The computation of capital gains is done account-wise.

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Classification of demat: Dematerialisation for households would notably imply actions :

to address wasteful behaviors and promote debate on advertising; promote products without waste and recycled products : empowering consumers for recognizing green products and services; replacing products with services; increasing the durability of products and ecoefficiency; promoting products containing recycled materials Master information and communication technologies: sparking off the debate on the dematerialisation potential of ICT; stimulating research in ICT which could benefit the environment.

Dematerialisation in offices and other sectors would consist in actions:

to green public procurement rules: adaptation of rules; increasing knowledge of ecological office stationery; rationalise the use of ICT: estimating the quantities of waste resulting from the use of ICT; raising awareness of efficient use of ICT; in other sectors, to promote dematerialisation at events, fairs and exhibitions; to address the building sector.

The Third Waste Management Plan also aims at encouraging the reuse and repair of goods.

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Dematerialisation in offices The Brussels Region has launched pilot projects in public and private enterprises to assess the potential of paper and energy savings allowed by the proper use of new information and communication technologies. The project also aimed to identify factors which change consumption and to determine ways to impact positively on those factors. Ten pilot entities have been selected, and 3 potential scenarios for improvement identified:

awareness and education of employees introduction of new technologies and eco-efficient too

Electronic settlement: The electronic settlement system came about largely as a result of Clearance and Settlement Systems in the World's Securities Markets, a major report in 1989 by the Washington-based think tank, the Group of Thirty. This report made nine recommendations with a view to achieving more efficient settlement. This was followed up in 2003 with a report, Clearing and Settlement: A Plan of Action, with 20 recommendations. In an electronic settlement system, electronic settlement takes place between participants. If a non-participant wishes to settle its interests, it must do so through a participant acting as a custodian. The interests of participants are recorded by credit entries in securities accounts maintained in their names by the operator of the system. It permits both quick and efficient settlement by

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removing the need for paperwork, and the simultaneous delivery of securities with the payment of a corresponding cash sum (called delivery versus payment, or DVP) in the agreed upon currency.

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Settlement of securities: Settlement (of securities) is a business process whereby securities or interests in securities are delivered, usually against (in simultaneous exchange for) payment of money, to fulfill contractual obligations, such as those arising under securities trades. In the U.S., the settlement date for marketable stocks is usually 3 (three) business days after the trade is executed, and for listed options and government securities it is usually 1 (one) day after the execution. As part of performance on the delivery obligations entailed by the trade, settlement involves the delivery of securities and the corresponding payment. A number of risks arise for the parties during the settlement interval, which are managed by the process of clearing, which follows trading and precedes settlement. Clearing involves modifying those contractual obligations so as to facilitate settlement, often by netting and novation.

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CHAPTER II METHODOLOGY:
METHODOLOGY: A Dematerialized account is essential to buy or sell stocks. Opening a Demat Account is similar to that of a bank account. It is just like a bank account where actual money is replaced by shares. You don't have to possess any physical certificates showing you own shares. They are all held electronically in your account. A broker is separate from a DP. A broker is an associate of the stock exchange, who buys and sells shares on behalf of his clients. The Depository Participant will provide the periodic statements of holdings and transactions like a bank account. This account is most important for trading and investing purposes. These days, practically all trades have to be settled in dematerialized form. Although the market controller, the Securities and Exchange Board of India (SEBI), has allowed trades of up to 500 shares to be settled in physical form, none focuses on physical shares. So a demat account is a must for trading and investing. Persons opening a Demat Account should have a PAN (Permanent Account Number).

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Use of the study Through this study is apparently elementary in nature, it would be of numerous uses for the researchers in the days a head. 1. It would be of very great use to understand the relationship of demat account of banking sector. 2. The study would give any casual reader of the thesis and exposure to the ways and means of enhancing urban mass by introducing various system by banks. 3. Numerous and innovative studies would speak of in the days ahead about the development banking sector in urban area.

Scope and limitation of the study: The present study seeks to analyze current operations of karvy stock broking company regarding the demat processing services. Moreover demat trading and its operation market is a vast area with changing day to day regulation. So studying about demat services and its implications, to the length and breath and finding the pors and cons accurately from the point of view of investors protection is a difficult task in view of the time and energy left before the candidate.

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Objectives of the study: 1. To study and analyze the process of Dematerialization and Investors opinion towards Demat Processing. 2. To know and explain procedure for opening of Demat account and process of dematerialization of securities to eliminate the problem related with physical holdings of securities. 3. To explain the advantages of Dematerialization of securities, convince and make them to dematerialize their securities. 4. To know the problem faced by the investor and reason for physical holdings of securities without dematerialization of securities. 5.To give awareness among the investors about Demat and to make them to open Demat Account.

Collection of secondary data: This research study is purely relied on the secondary data the secondary data required for the study could be obtained mostly from the books, journals, officials, reports, periodical brought out by the government of India in addition to these efforts would be made to collect as much information from the internet about the banking sector development in rural India. These information would make exhaustive and through going in every respect.

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Limatations: Through this study is purely explorative in nature it is brought with number of limitation. The most outstanding among them could be listed as follows. 1. Adequate secondary data are not available regarding the investor and their demat account. 2. This study concentrates only on role of the banking sector in urban area.
3.

This study mainly concentrates on the role of banks under institutional agencies.

Plan of the study: The first chapter embodies comprehensive introduction about the banking sector in general and need for rural concentration for developing the rural areas in particular. The second chapter contain methodology of the study are explained. Third chapter is based on role and analysis of demat account is discussed. Fourth chapter is based on problem of demat account. The last chapter would provide a summary of the finding conclusion and suggestion arrived at.

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CHAPTER-III ROLE & ANALYSIS OF DEMAT A/C:

ROLE OF DEMAT A/C A Demat account is very similar to a bank account. In bank accounts you electronically hold money, whereas in Demat accounts you electronically hold shares. All buying and selling of shares happens through a Demat account. The Securities and Exchange Board of India (SEBI) mandates a demat account for share trading above 500 shares. With growing financial awareness, more and more people now want to dabble in the share market. To do this, one should understand the basic requirements to trade in shares. A company enlisted in a stock exchange, is under obligation to offer the securities in both physical and dematerialized mode. As the name suggests physical securities mean actual certificates giving information about the shares of a company owned by a person. In the same manner, Dematerialization is the process of converting physical shares (share certificates) into an electronic form. Shares once converted into dematerialized form are held in a Demat account. Today, almost all of the shares trading happen using the Demat mode of shares.

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Function of Depositary System: Dematerialisation:- One of the primary functions of depository is to eliminate or minimise the movement of physical securities in the market. This is achieved through Dematerialisation of securities. Dematerialisation is the process of converting securities held in physical form into holdings in book entry form. Account Transfer: The depository gives effects to all transfers resulting from the settlement of trades and other transactions between various beneficial owners by recording entries in the accounts of such beneficial owners. Transfer and Registration: A transfer is the legal change of ownership of a security in the records of the issuer. For effecting a transfer, certain legal steps have to be taken like endorsement, execution of a transfer instrument and payment of stamp duty. The depository accelerates the transfer process by registering the ownership of shares in the name of the depository. Under a depository system, transfer of security occurs merely by passing book entries in the records of the depositories, on the instructions of the beneficial owners. Corporate Actions: A depository may handle corporate actions in two ways. In the first case, it merely provides information to the issuer about the persons entitled to receive corporate benefits. In the other case, depository itself takes the responsibility of distribution of corporate benefits.

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Pledge and Hypothecation: The securities held with NSDL may be used as collateral to secure loans and other credits by the clients. In a manual environment, borrowers are required to deliver pledged securities in physical form to the lender or its custodian. These securities are verified for authenticity and often need to be transferred in the name of lender. This has a time and money cost by way of transfer fees or stamp duty. If the borrower wants to substitute the pledged securities, these steps have to be repeated. Use of depository services for pledging/ hypothecating the securities makes the process very simple and cost effective. The securities pledged/hypothecated are transferred to a segregated or collateral account through book entries in the records of the depository Linkages with Clearing System: Whether it is a separate clearing corporation attached to a stock exchange or a clearing house (department) of a stock exchange, the clearing system performs the functions of ascertaining the pay-in (sell) or pay-out (buy) of brokers who have traded on the stock exchange. Actual delivery of securities to the clearing system from the selling brokers and delivery of securities from the clearing system to the buying broker is done by the depository. To achieve this, depositories and the clearing system should be electronically linked.

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Benefits of Depositary System : The direct and indirect benefits of the depository system are described in detail below. In the depository system, the ownership and transfer of securities takes place by means of electronic book entries. At the outset, this system rids the capital market of the dangers related to handling of paper. Elimination of bad deliveries:-

In the depository environment, once the holdings of an investor are dematerialised, the question of bad delivery does not arise, i.e., their transfer cannot be rejected due to defect in the quality of the security. All possible reasons for objecting transfer of title due to deficiencies associated with transfer deed and share certificates are completely eliminated since both transfer deed and share certificates are eliminated in depository system.

Elimination of all risks associated with physical certificates:-

Dealing in physical securities has associated security risks of theft of stocks, mutilation or loss of certificates during movements to and from the registrars. These expose the investor to the cost of obtaining duplicate certificates, advertisements, etc. Such problems do not arise in the depository environment.

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No stamp duty:-

There is no stamp duty for transfer of equity instruments and units of mutual funds in the depository system. In the case of physical shares, stamp duty of 0.5% is payable on transfer of shares. Immediate transfer and registration of securities:-

In the depository environment, once the securities are credited to the investors account on pay out, he becomes the legal owner of the securities. There is no further need to send it to the company's registrar for transfer of ownership or registration which is necessary in the case of physical securities. This process normally takes longer than the statutory prescribed period of two months thus exposing the investor to opportunity cost of delay in transfer and to risk of loss in transit. To overcome this, the normally accepted practice is to hold the securities in street names, i.e., not to register the change of ownership. However, if the investors miss a book closure, the securities are not good for delivery and the investor would also stand to loose his corporate entitlements.

Faster settlement cycle:-

With the introduction of electronic form of settlement, Indian Capital markets have moved from 15 day long settlement cycle to T+2 settlement cycle where the settlement takes place on 2nd day from the day of trading. This enables faster turnover of stock and enhances liquidity with the investor.

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Buyer is secured:-

In the physical environment, seller was secured since the sale proceeds were always fully realisable but the buyer was not, since it was not certain whether shares purchased will get transferred or not. The market principle that buyer is king did not apply to the capital market. This situation has now been corrected. Faster disbursement of non-cash corporate benefits:-

NSDL provides for direct credit of non-cash corporate entitlements like rights, bonus, etc., to an investor's account, thereby ensuring faster disbursement and avoiding the risk of certificates getting lost in transit. Reduction in rate of interest on loans:-

Some banks provide this benefit against pledge of Dematerialised securities. Dematerialised securities eliminate hassles/risks like getting securities registered in their name at the time of book closure if the pledgee defaults in repayment. Also eliminated is the risk of stocks coming under objections when they are sent to the company's registrar for registration, if the pledge has to be invoked.

Increase in maximum limit of advances:-

This has increased from Rs. 10 lakh to Rs. 20 lakh per borrower. There is also a reduction in minimum margin from 50% to 25% by banks for advances against

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Dematerialised securities as per the Monetary and Credit Policy of Reserve Bank of India for the first half of 1998-99. Reduction in brokerage:-

Since introduction of electronic settlement of securities there has been a significant fall in the brokerage charged for brokers for effecting and settling trades of investors at the stock exchanges. This benefit is given to investors as dealing in Dematerialized securities reduces their back office cost of handling paper. It also eliminates the risk of being the introducing broker. Reduction in handling of huge volumes of paper:-

In the physical environment, every entity involved in purchase or sale of securities was to handle papers and pass on papers to the next entity. Number of papers to handle increased with the volume of transactions. However, in the depository environment, except the delivery instruction to be given by the client/broker, there is no other paper movement. NSDL has permitted use of floppies to give debit instructions for large volumes of transactions. NSDL has recently introduced a common internet based platform, SPEEDe, for Clients of all DPs so that Clients can issue instructions to their DPs through Internet. Using SPEED-e the client need not write delivery instructions or visit its DP for issuing instructions. Clients can monitor the status of instructions given by them on SPEED-e on Internet.

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Periodic status reports:-

DPs need to provide periodic reports to investors on their holdings and transactions. This leads to better management control on the part of the servicing agency and better information for the investors. Elimination of problems related to nomination:-

An account holder can get securities in all companies transmitted/transferred to his account by completing formalities with a single entity i.e. DP. He need not deal with all companies individually. Dematerialised securities can be delivered in the physical

segment:Securities forming a part of the SEBI specified compulsory list (wherein delivery in demat form is mandatory for all categories of investors) can be delivered in physical form in the stock exchanges connected to NSDL & CDSL. This requirement is applicable to physical deliveries wherein the number of securities is less than 500. Elimination of problems related to change of address of investors,

transmission, etc.:In case of change of address or transmission of Demat shares, investors are saved from undergoing the entire change procedure with each company or registrar. Investors have to only inform their DP about the change along with all relevant documents. The required changes are effected in the database of all the companies where the investor is a registered holder of securities. The

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investor will receive all cash corporate benefit like dividends, interest warrants, redemption money, etc. at the new address with immediate effect. Elimination of problems related to selling securities on behalf of a

minor:NSDL system provides facility for opening demat accounts in the name of minor and holding their securities in their own name. Since, under the Contract Act, 1872, the minor is not eligible to enter into contracts at their own, the account in the name of minor is required to be operated by their guardian. The guardian may be the natural guardian, guardian appointed by will or the guardian appointed by an order of the court. The minor's guardian will be eligible to open, operate and close the account on behalf of the minor. The guardian(s) would be signing the instruction slips to be given to the depository participant, on behalf of the minor. A minor however cannot be a joint account holder. Non cash corporate benefits arising out of bonus/rights allotment of shares are credited to the account of the minor. Cash corporate benefits will be issued by the concerned issuer of securities in the name of the minor. Convenient consolidation of accounts:-

If multiple accounts were opened by investors, all accounts can be consolidated into one account by giving instructions to DP. In case of physical certificates, consolidation of folios required correspondence with all the companies individually.

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Convenient portfolio monitoring:-

Client can monitor portfolio by checking a single statement of holding/transaction. Newer services:-

Opportunities like pledge/hypothecation and stock lending are given specifically by the depository system. Increased volumes:-

Due to ease in transaction and reduced costs, many players have entered/ increased their transactions. This helps in improving liquidity.

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Advantages of Demat : The demat account reduces brokerage charges, makes

pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments. It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses.

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Axis Bank ( ONLINE TRADING ) : Axis Bank in alliance with Geojit Financial Services now offers you an Online Trading Account. Trade from the comfort of your home or office either through the Internet or the Phone. This service provides you with an integrated Savings Bank Account, Demat Account and an Online Trading Account to give you a convenient and paper free trading experience. As an Axis Bank Online Trading Customer you would also have the flexibility to get an insight to a complete range of Corporate Information, Reuter News and Research Tools which would help you to take timely Investment decisions.

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Axis Bank ties up with Motilal Oswal for online trading :

Axis Bank customers, who have a savings as well a demat account with the bank, can open a trading account with Motilal Oswal. We hope this alliance will help us move from strength to strength, said Motilal Oswal chairman and managing director, Motilal Oswal Financial Services. Axis Banks 10 million customers can access our online state-ofthe-art e-trading infrastructure via the banks website or can just call to trade. Our services will be backed by premium research, advisory and detailed reports of the transactions undertaken. Speaking on the occasion, Sonu Bhasin, president, retail financial services, Axis Bank, said the partnership marks yet another step by the bank in leveraging technology to offer convenient financial solutions to customers. We are delighted to join hands with Motilal Oswal Securities to offer another New Age service, which will boost our existing retail banking suite of products, Bhasin said. MOSL will offer Axis Bank customers instant order/ trade confirmation, single margin for equity/ IPO/ derivatives, buy now sell tomorrow and after market hours order placement facilities, and margin benefit on hedged positions. The customers will be able to take advantage with MOSLs research and advisory facilities such as online research-based advice, access to latest research reports on the economy.

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AXIS BANK HIGHLIGHTS Network 580 branches and extension counters 4 foreign offices in Singapore, Hong Kong, Shanghai and Dubai 2457 ATMs reaches out to 350 cities, towns and villages across the country. Business (as on 30th June 07) Total Business over 102,000 crores Deposits: 61091 crores Advances: 41285 crores Leadership positions: Market Capitalisation: 21817 crores (on 27th July 07)5th largest in India 2457 ATMs Among top 3 deployers in India. 64 lakh debit cards Among top 3 issuers in India 48,000 EDC machines Among top 3 deployers in India 2322 CMS clients Among the top playerDebt syndication - among the top 3 arrangers of corporate debt in India. Profitability: FY 07 Net Profit: 659 crores Consistent track record of profitability. Net profit increased by more than 30% y-o-y in the past 29 out of 31 quarters. Asset Quality: Net NPA- 0.59% Gross NPA 1.01%

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CHAPTER IV PROBLEMS OF DEMAT A/C:

The disadvantages of dematerialization of securities can be summarized as follows: Trading in securities may become uncontrolled in case of dematerialized securities. It is incumbent upon the capital market regulator to keep a close watch on the trading in dematerialized securities and see to it that trading does not act as a detriment to investors. The role of key market players in case of dematerialized securities, such as stock-brokers, needs to be supervised as they have the capability of manipulating the market. Multiple regulatory frameworks have to be confirmed to, including the Depositories Act, Regulations and the various By-Laws of various depositories. Additionally, agreements are entered at various levels in the process of dematerialization. These may cause anxiety to the investor desirous of simplicity in terms of transactions in dematerialized securities. However, the advantages of dematerialization outweigh its disadvantages and the changes ushered in by SEBI and the Central Government in terms of compulsory dematerialization of securities is important for developing the securities market to a degree of advancement. Freely traded securities are an essential component of such an advanced market and dematerialization

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addresses such issues and is a step towards the advancement of the market. You believe in simple formula higher the number of recommendations more the chances of rising that particular stock. This theory works some times but fails most of the time. You come across 100s of opinions and views which instead of benefiting you in anyway makes you more confused and in decisive in every possible way. You buy or sell shares without any confidence and faith in your trade because you seldom knows the real catalyst which is responsible for increasing the reaction in that particular stock. At a slightest profit booking you deem it a major correction on anvil and most of the time run for a shelter asking every next person whether to hold / sell the stocks and quite often take decisions which is almost against your interest. Every correction is an opportunity to buy certain stocks and similarly every rise offers an opportunity to book profit and switch over to next undervalued share, Instead you get shocked and starts buying the stock at lower levels which sometimes works wonder but mostly its un productive. Many Group members at different groups and message boards generously post their valuable tips without disclosing their source of information and accepts your thanks and appreciation instantly. In fact they Are trapping you in a spider web which you never realize because you are already obliged by
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his generosity of giving you free advise, if the stock is appreciated he will come forward and claim, in case of loss none of your group members or moderator can make him accountable. Just ask a simple question to yourself, Why anyone wants to help you free? By spending his own time, resources and money. Sending you free tips through messengers, SMS or through postings on different yahoo groups. Answer is simple, he is either inspiring you to buy that stock so he can sell of his stake by increasing volume in that particular stock or he with a proxy identity is helping any broker or a research house which had already accumulated that particular stock. In case if market is bullish the stock is further appreciated and you also earn some profit otherwise if market falls you are un willingly trapped once again and bound to hold the stock till it recovers.

Just try any paid group or analyst once in your life time after gathering relevant information from every available resources or through the members of that groups, in case of doubts or contradicts directly correspond with the group owner before joining them. Am sure you will be among the few who regularly earns from their trade and investments compared to others who buy and awaits for profits. Remember you have to follow the trend of the market and act accordingly; market will never work as per your whims and fancies.

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Trading in securities may become uncontrolled in case of dematerialized securities. It is incumbent upon the capital market regulator to keep a close watch on the trading in dematerialized securities and see to it that trading does not act as a detriment to investors. The role of key market players in case of dematerialized securities, such as stock-brokers, needs to be supervised as they have the capability of manipulating the market. Multiple regulatory frameworks have to be confirmed to, including the Depositories Act, Regulations and the various Bye Laws of various depositories. Additionally, agreements are entered at various levels in the process of dematerialization. These may cause anxiety to the investor desirous of simplicity in terms of transactions in dematerialized securities. However, the advantages of dematerialization outweigh its disadvantages and the changes ushered in by SEBI and the Central Government in terms of compulsory dematerialization of securities is important for developing the securities market to a degree of advancement. Freely traded securities are an essential component of such an advanced market and dematerialization addresses such issues and is a step towards the advancement of the market.

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CHAPTER- V CONCLUSION & SUGGESTION :

Conclusion: I would conclude that it is possible, on the basis of existing technology and under the existing legal framework, to replace bills of lading by electronic documents, which can in principle afford to the parties security at least as great as existing paper documents. Critics would no doubt object that making the models described in the previous sections workable depends heavily on the contractual provision made by the parties. New contracts of sale and carriage will have to be devised in any event, if only to agree on rules of conduct and protocols, without which any electronic data interchange, is impossible. Given that new forms of contract will have to be devised in any event. It seems appropriate to ensure that they also make appropriate provision for the transfer of property, constructive possession and contractual rights and liabilities. Of course, for the system to be as open as the present system these contracts will need to be standardized, which may be considerably more difficult.

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Recommendations: In our latest future sign we look at how dematerialization is emerging as a significant new direction for consumer culture. One of the most interesting things about the move from the Real to the Virtual is how it reflects a real change in attitudes towards what we value and desire. The accumulation of possessions no longer holds the same cachet in a world where, friends, experiences and info- bites are the new status symbols. We are seeing a gradual change in attitudes to ownership. As media, music and film go on-demand we will continue to see a decline in the status and value of collections. People will shift from wanting to own to wanting to have ubiquitous access and enjoy at their pleasure. What is evolving is a new form of digital minimalism, which sees more of what we own and value becoming liberated from the physical world. While it currently represents the aspiration rather than the reality, many people recognize that dematerialization offers a solution to many of the common problems in modern life. Some economists even see the move towards dematerialize as providing the next step in human and economic evolution, as well as a solution to the issue of sustainability and growth. The cloud computing revolution is still in its infancy but it will fundamentally affect attitudes towards the value and desire of material object to the digital cloud or global data field. The transition from the material world of devices, to the virtual world of cloud computing is already revolutionizing the mobile device category. This is transforming the way people use the technology, freeing them from the constraints and limitations of specific devices or locations. Music

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streaming will likely eclipse mp3 purchases in popularity. Kindle sales are already outselling hardback books on Amazon. The service economy is adapting to the fresh demand of the dematerialized world. There has been growth in dematerialization services such as ipodmeister, which will digitize your record collection, enabling you increased access and freeing up physical space in the home. For many ownership of too many physical objects is being seen as burden. More people, not just the super rich are placing greater value on memories and life experiences over material possessions. Dematerialize is also seen as way to increase happiness levels across developed economies by reducing our obsession with acquiring material possessions. The current growth in philanthropy (Bill Gates, Paul Allan, Warren Buffett) has, in its own way, become the new way of gaining status and admiration. Austrian millionaire Mr. Rabeder who after acquiring a lifetime of luxury possession realized that he wasnt living a real life and had become a slave to his possessions. Other examples like Kelly Suttons Cult of Less shows that dematerializing your life can be both liberating and inspirational. Everywhere you look you can see the expansion of virtual platforms. The amount of time and money spent visiting and investing in virtual worlds is increasing. From facebook to flickr people are growing used to their connections and precious memories existing in virtual spaces. Back-up services and remote storage will witness huge growth. Mirroring the success of online apps, there has also been a huge rise in virtual goods, either through online games or through addictive applications that convert hard currency into virtual goods. Facebook has introduced its own credit system of facebook credits and is in the process of revamping its virtual gift site.
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As our most valuable possession disappear from the tangible world into in the virtual realm (photos, books, movies, memories, music, art etc.) we need virtual storage. People are beginning to think about what happens if you loose you dematerialized possessions. Hard drives will become supervalued. The increase in dematerialized possessions is likely to fuel a growing demand for back up and management services. Some insurers like UKs More Than already cover digital downloads but expect to see insurance and digital reclamation as a growth sector as consumers seek to protect and recovery precious files.

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Suggestions:

The investors greater than 55-aged group must be focused mainly. Advertisement must be given more priority to attract the investors, which is less in case of integrated. Investors must be given awareness of others Schemes, so that they can know the advantage of other schemes to invest. Most of the investors are feeling Uncomfortable while Opening Demat account with IEP, because of more process involved and strict rules.

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BIBLIOGRAPHY
SOURCES OF BOOKS 1. Theory and practice of banking K.K.Upadhyay. 2. Challenges and opportunities for Indian banks R.K.Uppal. 3. History of money and banking K.K.Upadhyay. 4. Role of public sector banks in Indian economy Krishan Kant upadhyay.

NEWSPAPERS: 1) THE ECONOMIC TIMES 2) THE TIMES OF INDIA 3) DNA- MONEY

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SOURCES OF WEBSITES 1
2 3 4 5 6 7 8 9 10

www.Legalserviceindia.com www.wikipedia.com www.sebi.in www.axisbank.in www.demataccountindia.in www.scribd.com www.managementparadise.com www.economywatch.com www.financeindia.com www.banksnetindia.com

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