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A Depository Participant (DP) acts as a bridge between investors and depositories, enabling secure, electronic handling of securities. DP operations involve opening and managing demat accounts, converting securities between electronic and physical forms, settling trades, processing corporate benefits (like dividends or bonuses), and updating account information. This service provides investors with a seamless, secure way to participate in the financial markets.
- Must have a certificate of registration from SEBI under sub-section (1) of section 12 of the Act.
- Minimum net worth of ₹50 lakhs.
- Aggregate value of the securities portfolio should not exceed 100 times the net worth.
- Net worth criteria for multiple depositories must be met separately.
- No portfolio limit if the net worth is ₹10 crore or more.
- Minimum net worth of ₹50 lakhs.
- May act as a participant for others if the net worth exceeds ₹50 crore in addition to the amount specified by other authorities.
- Minimum net worth of ₹10 crore.
- Registered under sub-section (1) of section 12 of the SEBI Act.
Fulfillment of eligibility criteria under Regulation 19, sub-regulation (a) to (d) of the SEBI (Depositories and Participants) Regulations, 1996 and CDSL Bye-Law 5.2.
- ₹3 Crores (INR) effective from February 23, 2023.
- ₹5 Crores (INR) effective from February 23, 2024.
As per the Securities and Exchange Board of India (Depositories and Participants) (Amendment) Regulations, 2022 dated February 23, 2022.
- Net worth of ₹3 Crores within one year of notification.
- Increased to ₹5 Crores within two years of notification.
Self-clearing members fulfilling the net worth requirements under the SEBI (Stock Brokers) Regulations, 1992 are also eligible to register as a Depository Participant.
The application must be complete in all respects and meet the threshold criteria to be considered by the Membership Committee of CDSL on its merits.
- Stock brokers should have a minimum net worth of ₹5 crore.
- Limited Participant status is allowed for brokers with a net worth between ₹1 crore and ₹5 crore with restrictions.
- NBFCs should have minimum net worth of ₹50 Lakhs
- Applicant should not have been expelled or suspended by SEBI or any stock exchange.
- Applicants may be considered if 3 years have passed since such punishment was imposed.
Applicant must furnish detailed information about the business history, and the background and experience of directors and promoters.
Applicant must have adequate infrastructure, systems, safeguards, and trained staff to operate as a DP.
Applicant must be considered a "fit and proper person" under SEBI (Intermediaries) Regulations, 2008.
Granting of the DP certificate must be in the interests of investors in the securities market.
• Ensure fulfillment of eligibility criteria as specified in the Depositories Act, 1996 and SEBI (Depositories & Participants) Regulations, 2018.
• Prepare documents as per the checklist provided by SEBI.
• CDSL will scrutinize the application and may request additional documentation/information if required.
• Provide the requested documentation/information to CDSL within 7 days.
• Procure the computer hardware according to the specifications set by CDSL.
• Establish connectivity with CDSL using VSAT / Leased line / Ethernet / Router technology.
• Ensure the hardware is used exclusively for CDSL operations and is installed securely at the DP's office.
Ensure at least 2 trained staff members are available, one of whom must be NISM certified or have attended the 5-day DP training conducted by CDSL.
• Upon confirmation of hardware installation and connectivity, CDSL will forward the completed application form to SEBI for approval.
• After receiving in-principle approval from SEBI, the applicant will be advised to forward payment for SEBI registration, annual fees, and interest-free deposit.
• CDSL will forward the payment to SEBI, which will grant the Certificate of Registration to the intending DP.
• CDSL will enter into an agreement with the applicant upon receipt of payment for various charges.
• Forward the completed master creation form to CDSL.
• Specify the names of personnel at the office who will interact with CDSL for systems and operations-related matters.
CDSL will generate a unique DP-ID number for creating the DP account, which is unique for each DP.
The SEBI Certificate of Registration remains valid unless suspended or canceled by the Board.
• To keep SEBI registration in force, pay the SEBI registration fees of ₹2,00,000 (plus 18% GST) every 5 years from the sixth year of registration.
• Submit the required documents and CDSL processing fees of ₹20,000 (plus 18% GST) to CDSL three months prior to the expiry of the block for which the SEBI registration fees has been paid.
Submit an application in the prescribed format along with the necessary supporting documents and fees to NSDL. You can refer to the list of required documents here.
Upon receipt of the complete set of documents, the application will be placed before the relevant committee of NSDL. Upon approval, you will be required to procure the necessary infrastructure/hardware as per the System Specifications & Investments guidelines.
• You must send your staff for a three-day training program at NSDL’s Mumbai office to familiarize them with the NSDL system.
• Staff must also obtain the NISM Series VI - Depository Operations Certificate Examination/CPE qualification as per relevant circulars.
After setting up the required infrastructure/hardware and completing the necessary network/system testing, NSDL will conduct a pre-activation inspection at your premises.
• Once the pre-activation steps are completed, NSDL will forward your application to SEBI for approval.
• Upon SEBI’s acceptance of your application, your participantship will be activated in a pilot environment for testing purposes. You must successfully complete this testing phase.
• Note: If you are already a CDSL DP, your application will be processed internally at NSDL and will not be sent to SEBI.
You will need to pay the necessary fees to SEBI and NSDL as per the guidelines mentioned at NSDL Charges.
Enter into an agreement with NSDL to become an official Participant of NSDL.
After fulfilling all the above requirements, your DP account will be made operational within the NSDL system.
The purpose of the SEBI Regulation on Depositories and Participants is to establish a comprehensive framework that governs the conduct and operations of Depositories and Participants in India. It aims to ensure
Create a structured regulatory framework for the functioning of depositories and participants in the securities market.
Enhance the efficiency of securities transactions through streamlined processes like dematerialization and electronic settlement.
Safeguard investor interests by ensuring transparency, accountability, and proper governance among depositories and participants.
Maintain the integrity of the securities market by enforcing compliance and regulatory standards for participants involved in securities transactions.
For ease of reference, a comprehensive table of contents detailing all areas covered in the Regulation is provided below:
* The first five chapters focus on the framework and governance of depositories, while Chapter VI specifically addresses the registration and obligations of participants in the securities market.
|
Chapter Number |
Chapter Name |
Brief Summary |
|
I |
Preliminary |
Outlines the title and key definitions for Depositories and Participants |
|
II |
Registration of Depository |
Details the requirements and procedures for registration as Depositories and Participants |
|
III |
Certificate of Commencement of Business |
Outlines requirements for obtaining and maintaining a business certificate. |
|
IV |
Ownership of Depository |
Details ownership structure and eligibility criteria for depositories. |
|
V |
Governance of Depository |
Establishes governance framework, including board composition and duties. |
|
VI |
Registration of Participant |
Specifies registration process and requirements for participants in securities. |
|
VII |
Rights and Obligations of Depositories, Participants, Issuers, Manner of Surrender of Certificate of Security and Creation of Pledge or Hypothecation |
Defines rights, obligations, and procedures for securities pledging. |
|
VII(A) |
RESTRICTION IN DEALING WITH OTHER ENTITIES
|
Establishes limitations on depositories associating with unregistered entities providing securities advice or performance claims, with exceptions for approved digital platforms, and outlines SEBI’s authority to take action for violations. |
|
VIII |
Listing of Securities |
Provides guidelines for the listing process and related compliance requirements. |
|
IX |
Inspection |
This chapter outlines the Board’s inspection authority, procedures, obligations of Depositories and Participants, and potential actions following inspection findings. |
|
IX(A) |
ENFORCEMENT |
Defines SEBI’s authority to issue directions and impose penalties on depositories for regulatory violations, detailing possible actions and considerations. |
|
X |
Procedure for Action in Case of Default |
This chapter outlines liabilities for Depositories and Participants in default, detailing actions for non-compliance, false information, and failure to cooperate. |
|
X(A) |
POWER TO RELAX STRICT ENFORCEMENT OF THE REGULATIONS
|
Permits SEBI to grant temporary exemptions for up to twelve months to promote innovation in the securities market through a regulatory sandbox, with specified conditions. |
|
XI |
Miscellaneous |
This chapter specifies other miscellaneous regulations. |
For more information, please refer to the SEBI Regulation using the link below for complete details:
The Securities and Exchange Board of India (SEBI) has issued this Master Circular to provide a comprehensive compilation of all relevant circulars and directions applicable to Depositories. This document aims to ensure that stakeholders can access pertinent regulations in a consolidated format, thereby enhancing compliance and operational clarity.
To compile all applicable circulars and directions into a single Master Circular for Depositories, ensuring easier access for users.
This Master Circular supersedes previous circulars and communications up to August 31, 2023, thereby streamlining regulatory requirements.
To clarify the obligations and responsibilities of Depositories and their participants, facilitating better governance and operational integrity.
Cut-off Date
This Master Circular is based on guidelines issued up to August 31, 2023.
Compliance Reminder
All Depositories and their participants must ensure compliance with the provisions of this Master Circular. Adhering to these regulations is vital for maintaining the integrity of the securities market and protecting investor interests.
For ease of reference, a comprehensive table of contents detailing all areas covered in the Master Circular is provided below:
Section | Subject |
1 | Beneficial Owner (BO) Accounts |
2 | Depository Participants (DP) Related |
3 | Issuer Related |
4 | Depositories Related |
For more information, please refer to the SEBI Master Circular using the link below for complete details:
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