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    Question

    What is the term used to describe the agencies that

    assist investors in making investments in shares, debentures, mutual funds, and other financial instruments?
    A Depository Participant Correct Answer Incorrect Answer
    B Authorized Dealer Correct Answer Incorrect Answer
    C Depository Correct Answer Incorrect Answer
    D Depository agents Correct Answer Incorrect Answer
    E Authorized participants Correct Answer Incorrect Answer

    Solution

    "Depository as an institution that works like bank" Depository maintains an account for investors securities (share, debentures, mutual fund etc.) held by them in a dematerialized or an electronic form. Investor used to hold the securities in the form of physical certificate which has their own disadvantages and to take a control over the irregularities of the capital market for the protection of an investor's interest, Depository system has been introduced in India where the securities could be handled in an electronic form by the process of dematerialization. We have 2 depositories in India which are well known as NSDL (National securities depository limited) and CSDL (Central Depository Services (India) Limited). They interface with the investors through their agents called Depository participants (DPs). DPs could be the banks (private, public and foreign), financial institutions and SEBI-registered trading members.

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