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Question
Justify the following statement.
The electronic holding of securities is safer than physical holding.
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Solution
- Under the depository system, securities are held in electronic form.
- Physical certificates can be lost, damaged, torn, stolen, misplaced during transit, etc.
- Delivering certificates that are torn, fake, etc. creates problems in buying and selling of securities.
- The transfer and settlement of securities are done electronically.
- It leads to the elimination of storage and handling of certificates.
- So, all risks associated with physical holding are eliminated by the electronic holding of securities.
- Hence, the electronic holding of securities is safer than physical holding.
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RELATED QUESTIONS
In physical mode, securities are held in ______ form.
Select the correct answer from the options given below and rewrite the statement.
______ has to pay charges to maintain Demat Account.
Match the pairs.
| Group ‘A' | Group ‘B' |
| a) Bad Delivery | 1) 1956 |
| b) Depository Act | 2) A 12 digit number/code. |
| c) ISIN | 3) Connects Government and Bank. |
| d) Depository participant | 4) Second Depository in India. |
| e) CDSL | 5) The Issuer Company. |
| f) Depository | 6) Problem faced in physical mode. |
| g) Beneficial owner | 7) A 10 digit number/code. |
| 8) Connects Depository and Investor. | |
| 9) First Depository in the world. | |
| 10) Coustodian of securities in electronic form. | |
| 11) Problem faced in electronic mode. | |
| 12) 1996 | |
| 13) Government Organisation. | |
| 14) The Investor. |
Write a word or a term or a phrase which can substitute the following statement.
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Write a word or a term or a phrase which can substitute the following statement.
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| b) ____________ | 2) DP |
| c) First depository of world | 3) ____________ |
| d) CDSL | 4) ____________ |
(1999, Agent of Depository, Germany, physical to electronic)
Select the Suitable word for the following.
Dematerialization ____________.
Select the Suitable option for the following.
____________ DP.
Select the Suitable option for the following.
First depository of world ____________.
Select the Suitable option for the following.
CDSL ____________.
Correct the underlined word and rewrite the following sentence.
Allotment and Transfer of securities are time consuming in electronic mode.
Explain any four advantages of a depository system to an investor.
Justify the following statement.
Depository system is very similar to the banking system.
Explain any four advantages of depository system to the company.
