Given below are two statements:
Statement I: Financial institutions, banks and stock brokers are permitted to become depository participants.
Statement II: The intermediaries through which the national depositories serve investors are called registrars to the issue.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Statement I is correct but Statement II is incorrect.
Statement I: Financial institutions, banks and stock brokers are permitted to become depository participants. — Correct. These bodies, along with clearing corporations and non-banking finance corporations, are permitted to become depository participants.
Statement II: The intermediaries through which the national depositories serve investors are called registrars to the issue. — Incorrect. The intermediaries are called depository participants. They are electronically connected to the depository and serve as contact points with investors. A registrar to the issue is appointed by a company issuing securities.
NCERT (Pre-rationalised Edition): “Depository … The Central Depository Services Limited (CDSL) is the second depository to commence operations and was promoted by the Bombay Stock Exchange and the Bank of India. Both these national level depositories operate through intermediaries who are electronically connected to the depository and serve as contact points with the investors and are called depository participants. The depository participant (DP) serves as an intermediary between the investor and the Depository (NSDL or CSDL) who is authorised to maintain the accounts of dematerialised shares. Financial institutions, banks, clearing corporations, stock brokers and non-banking finance corporations are permitted to become depository participants. …” |