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CS Professional · Strategic Management and Corporate Finance · Role of Intermediaries in Fund Raising

Ananya wants to hold shares of Indian companies in dematerialised form. Which statement correctly describes the two depositories operating in India and their role?

NSDL and CDSL are India's two depositories. They hold securities in dematerialised form and carry out transfers by book entry, without physical certificates. They do not issue shares, which is done by the issuer company, and SEBI is the regulator, not a depository.

  1. ANSDL and CDSL are the depositories, and they hold securities in electronic form and effect transfers by book entryCorrect
  2. BNSDL and BSE are the depositories, and CDSL is a stock exchange
  3. CSEBI and NSDL are the depositories, with CDSL as the clearing corporation
  4. DNSDL and CDSL are the depositories, and they issue fresh shares on behalf of companies

Explanation

NSDL and CDSL are the two SEBI-registered depositories. They hold securities in electronic form and transfer ownership through book entries. They do not issue shares, since issuing is the company's function, which is why the last option fails.

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