Functional Operations at SCHIL

8/12/2019 Functional Operations at SCHIL

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Stock Holding Corporation of INDIA

Chetana Institute of Management Studies

Davangere - 577004, Karnataka, IndiaCentre Code: 2720

it!e of "ro#e$t %e&ort

Functional Operations at SHCIL

'(

)atra# ' * 520+40

. "ro#e$t re&ort su/mitted in &artia! fu!fi!!ment of the reuirements for Master

of 'usiness .dministration

of Sikkim Mani&a! 1niversit(, I)DI.

Sikkim Mani&a! 1niversit( of *ea!th, Medi$a! e$hno!gi$a! S$ien$es

S(ndi$ate *ouse, Mani&a! - 5704


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I here by declare that Project Report entitled


Submitted in partial fulfillment of the requirements for the degree of Master

of Business Administration

To Sikkim Manipal University, India, is my original work and not

submitted for the any other Degree, Fellowship, or any other similar title or

prizes

)atra# ' * 520+40

Place: Date:


3/57


The Project Report of

)atra# ' *

Title


as approved and is acceptable in quality and form

Internal examiner Internal examiner


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.'3 6 C))S

Cha&ters Com&an( "rofi!eIntrodu$tion to the Com&an(

28ision of the Com&an(

+Mission of the Com&an(

4/#e$tives of the Com&an(

5'asi$ fa$ts a/out S*CI3

*ierar$hi$a! Stru$ture of S*CI3

2 De&artmentation2 6ront ffi$e

22 'a$k ffi$e

2+ Dis&at$h

24 .utomation De&artment

25 6inan$e De&artment

+ S9 .na!(sis+ Strengths

+2 9eakness

++ &&ortunities

+4 hreats

4 Servi$es4 Introdu$tion

42 De&ositar( "arti$i&ants

4+ C!earing Mem/ers

44 )on %esident India

45 Derivatives

5 "rodu$ts5 .DD S*.%S

52 1I'1;

5+ 61)D I)8S54 < I ')DS

55 I)S1%.)C

5 SCK dire$t


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.CK)93D


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CM".); "%6I3

S C K * 3 D I ) < C % " % . I ) 6 I ) D I .

Introdu$tion to the $om&an(:

2lagged off at the initiati'e of the 3o'ernment of India% SHCI4 en5o$s an en'ia!le parentage

that 'er$ fe" organi6ations can !oast of% including leading Indian 2inancial Institutions and

Insurance ma5ors# It has !een 5ointl$ promoted !$ ID7I% ICICI% I2CI% II7I% )TI% 4IC% and 3IC and

its su!sidiaries#

It is headed !$ luminaries from its promoter institutions "ho constitute its 7oard of Directors

and take polic$ decisions pertinent to the affairs of the corporation# A senior management team that

reports to the 8anaging Director and C/0 aids% assists and strategies !usiness lines for the

Corporation#The primar$ focus of the corporation "as specific 9 to set up custodial ser'ices of

international standards in India and in the process to manage the entire arra$ of post trade acti'ities

of 2inancial Institutions and 2oreign Institutional In'estors "ith dedicated client relationship teams

and state1of1the1art reporting s$stems#

The corporation uickl$ garnered nearl$ ;< market share of the

domestic custodial !usiness and the financial figures shot up impressi'el$

for the first decade of its e&istence#=ith sustained market leadership% the !iggest in'esting !od$ of the countr$ in its client list%

SHCI4 ensures that its technolog$ support not onl$ holds enormous data!ases together !ut also

makes sense and ser'ice out of it too#

The Smithsonian Institute>s A"ard for inno'ati'e )se of Technolog$ in the 2ield of

2inance? in *++@ and Computer Societ$ of India A"ard "ere affirmations of its efforts% long !efore

information technolog$ started leapfrogging across the countr$#

SHCI4 has also recei'ed No Action 4etter? from Securities /&change Commission (S/C

of )SA% "hich renders it an eligi!le institution to hold assets of )S1!ased funds#


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2 8ision of the Com&an(:

To !ecome one stop shop for all financial ser'ices?#

This 'ision of the compan$ is slo"l$ !eing achie'ed "ith the fora$ of the compan$ into ne"

financial ser'ices and products into its portfolio the latest to !e the Insurance product% "hich "ould!e soon distri!uted#

+ Mission of the $om&an(:

To spread ualit$ Ser'ice through the inno'ati'e use of technolog$?#

4 /#e$tives of the Com&an(:

To retain the No#* position in the DP industr$ !$ !eing ahead of all other DP ser'ice pro'iders"ith the inno'ati'e use of technolog$#

To pro'ide 5ustified ser'ice to e'er$ rupee the client pa$s#

To ensure securit$ and con'enience of transaction to its clients at reasona!le price#

To channel technolog$ to make con'enient products for financial market that gi'e uantum

!enefits to in'estors% corporate houses and !rokers#

To reach . million Internet users in the $ears to come "ith e1commerce pro5ection scaling )SD

*# !illion#

To mo'e "ith speed and ease% di'ersif$ing into ne" areas% considera!l$ on others and

sharpening its focus and paradigms#

To increase its customer !ase% "hich at present is lakh#

To e'ol'e a ne" strateg$ to emerge as a !road !ased financial po"erhouse in the $ears to come#

To find "a$s to make information and reporting s$stem more effecti'e for institutional clients#

To e&pand to the South1/ast Asia% "ith the aim of !ecoming the leader#

5 'asi$s fa$ts a/out S*CI3

SHCI4 is India>s largest depositor$ participant

SHCI4 has around -;< market share i#e# o'er B lakhs demat accounts


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SHCI4 has appro ,;< market share of deli'er$1!ased transaction "hich amount to *#.. crore

transaction#

ecogni6ed !$ securities e&change commission (S/C% )SA as an eligi!le foreign custodian?#

SHCI4 has !een honored the Smithsonian a"ard !$ Conferr$ for its isionar$ use of IT? and

also from computer societ$ of India for !est usage of IT#

SHCI4 has installed euest Transmitting 8achines? (T8>s in the selected places !$

com!ining in'estor>s !ank% in'estor>s !rokers% stock e&change% depositor$ and depositor$

participants so that in'estors can make orders for saleEpurchase of securities# 7$ this SHCI4

!ecame the uni'ersal ser'ice pro'ider#

SHCI4 has "ide range of financial ser'ices 9 DP ser'ices% Custodial ser'ices%

Securities 4ending% 30I !onds% S34 ser'ices% 2und In'estment

*I%.%C*IC.3 S%1C1% 6 S*CI3 'anga!ore /ran$h

2007 0

/&ecuti'es

2ront 0ffice

7ack 0ffice

DIIS0NA48ANA3/

D/P)TF

8ANA3/

TAD/S 8AG/TIN3 ACC

0P/NINs i#e# determining positions to settle#

Sett!ement1 Performing actual settlement#

Co!!atera! Management1 Collection of collateral (cashEcash eui'alents and securities% 'aluation

on a regular !asis (as per R# # arma recommendations and setting up e&posure limits for T8s and

Institutional clients#

%isk Management1 Setting position limits !ased on upfront depositsEmargins for each T8 and

monitoring positions on a continuous !asis#

4 5 2 . d v a n t a g e s

SHCI4 has al"a$s !een a pioneer in clearing and settlement ser'ices in the cash segment at !oth the

e&changes# SHCI4 has the capa!ilit$ to handle large 'olumes of !usiness "ith greatest accurac$%

keeping customer interests as the top priorit$#

SHCI4 in it>s endea'our to ser'e 'arious entities in the deri'ati'es segment has de'eloped

indigenous solution keeping in 'ie" the strict regulator$ reuirements#

Pri'ac$ of each T8>s operations strictl$ maintained :SHCI4 !eing a professional clearing

mem!er has no trading interests in the deri'ati'es segment# There is strictl$ no

dissemination of information on trading or an$ other operation of an$ of its clients#

0ne1point contact for all the acti'ities :SHCI4>s Deri'ati'es segment is centralised and all

operations are handled !$ an e&clusi'e deri'ati'es team#

Dedicated team of professionals to handle Deri'ati'es operations: SHCI4 has a "ell1trained

team of professionals supported !$ !est s$stems% to handle deri'ati'es operations at NS/and 7S/# Clients can approach the team for trou!leshooting% conceptual understanding or

an$ other operational issue related to deri'ati'es trading#

Tie1up "ith !anks ha'ing nation1"ide reach for !anking acti'ities :Since settlement in

deri'ati'es trading takes place dail$# 2unds mo'ement has to !e fast# SHCI4 has tie up "ith

!anks (HD2C 7ank% ICICI 7ank% 3T7% ID7I 7ank%)TI 7ank% Canara 7ank etc# ha'ing


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"ide reach and modern facilities like TTEan$"here !anking etc# to contain the time lag in

!anking transactions#

Net"ork of more than *.; !ranches to support outstation clients :SHCI4 has nation "ide

reach "ith its *.; plus !ranches across the countr$ to support outstation clients# SHCI4>s

!ranches are geared up to pro'ide deri'ati'es clearing and settlement ser'ices to trading

mem!ers operating from respecti'e !ranches#

In !uilt checks and controls :SHCI4 has indigenousl$ designed s$stems that take care of the

stringent regulator$ reuirements for deri'ati'es trading in India#

Collateral 8anagement:SHCI4 has e&cellent s$stem to manage cashEcash

eui'alentsEsecurities deposited as collateral for deri'ati'es trading# Clients are informed as

and "hen e&pir$ of an$ instrument approaches# Securities are transferred in minimum

possi!le time# Corporate actions on securities are monitored and clients are !eing informed

accordingl$#

Support from Institutional participants:SHCI4 !eing a custodian clearing mem!er ha'ing

ma5or institutional clients like )TI% ID7I etc# "ho are also promoters of SHCI4% pro'ides

more credi!ilit$ to its clients#

Competiti'e ser'ice charges: SHCI4 is the pioneer in introducing Deri'ati'es Clearing and

Settlement ser'ices in the countr$# To promote deri'ati'es trading% the ser'ice charges are

designed not !ecome a hindrance for an$!od$ entering this market#

8ore le'erage: There is no need to !lock assets "orth s# ,; lakh as initial margin deposits

"ith e&change# Instead a Trading mem!er can take huge e&posures !$ in'esting the same

amount through a PC8 like SHCI4#

4o" in'estments: Deri'ati'es trading reuire compl$ing "ith stringent regulator$

reuirements and huge in'estment in !ack office s$stems for a Clearing 8em!er# 7$

choosing a PC8 like SHCI4% a trading mem!er can start trading "ith 'er$ little in'estment

in !ack office s$stems since a PC8 takes care of the !ack office acti'ities#

Institutional Ad'antage: Ad'antage of trading for institutional clients# A trading mem!er can

e&ecute institutional orders "ithout shrinking his o"n e&posure limits as institutional trades

are confirmed online !$ the respecti'e PC8#

Confidentialit$ of Trades: Since SHCI4 has no trading rights% the !usiness details of a

trading mem!er are not likel$ to !e misused #There is no o'erlapping of !usiness interests#


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2ocus: Due to highl$ competiti'e nature of the market% SHCI4>s ser'ice charges are

normall$ 'er$ lo" and it makes more !usiness sense for a T8 to outsource the clearing and

settlement acti'ities and focus on the core !usiness of trading#

4 5 + & e n a n . $ $ o u n t - % e u i r e m e n t s

Agreement: The T8 has to sign an agreement "ith SHCI4 to clear his trade in the format

prescri!ed !$ NS/E7S/ and suita!l$ modified !$ SHCI4# The agreement has to !e signed

!efore the T8 !egins his trading# A cop$ of the C81T8 agreement "ill !e for"arded to

NSCC4E7S/#Along "ith the agreement the trading mem!er should also su!mit :

o 7oard esolution appointing SHCI4 as clearing mem!er

o Attested cop$ of 8emorandum Articles of Association

o Cop$ of S/7I registration certificate

Consent: At the application stage% a T8 must mention that Stock Holding Corporation of

India 4td# (SHCI4 "ill clear his trades#

o 4etter of consent from SHCI4 can !e o!tained% "hich the T8 has to for"ard to

7S/ENS/ as the case ma$ !e#

Application 2orm: An application form% pro'ided !$ SHCI4% to !e filled !$ T8% gi'ing

details of addresses% phones% accounts etc# Appro'ed e1mail addresses should !e mentioned

in the application for recei'ing dail$ !ills#

8A3INS: Trading 8em!ers ha'e to deposit margins "ith the Clearing 8em!er for the

purpose of taking /&posure on the /&change and for dail$ settlement# At SHCI4% there are

t"o components of margins i#e# initial margin (I8 for e&posure and maintenance margin

(88 for dail$ settlement#

Initial 8argin(I8

minimum s# *; lakh as initial margin (I8 in either of the follo"ing "a$s:

o entire s# *; lakh in cash 0

o s# - lakh in cash and s# B lakh as cash eui'alent O 0

o s - lakh in cash% !alance s# B lakh as a com!ination of cash eui'alent O and

specified demat securities (su!5ect to ma&imum of s# , lakh after 'aluation


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Note: The a!o'e proportion is 'alid for NS/# 2or 7S/ minimum cash reuirements are s#-#, lakh#

7S/ 8em!ers can start trading "ith s #,; lakh(s#-#, lakh in cash% !alance s# ,#;; lakhs as a

com!ination of cash eui'alent and specified demat securities (su!5ect to ma&imum of s# -#,;

lakhs after 'aluation

Maintenance Margin (MM)

A trading mem!er has to deposit a certain percentage of initial margin (IM) in cash onlyto%ards his daily settlement of mared*to*maret margins+ premiums or any other chargespaya!le !y the ,M.

Initial Margin(IM) ** Maintenance Margin (MM)

More than or e-ual to Rs. / lah 0/1 of initial margin in cash only 222

"ess than Rs. / lah 3/1 of initial margin in cash only

G

Cash e-ui4alent includes Ban guarantee+ fi&ed deposit receipts or go4t. securities (As per5 R 6arma Committee report on deri4ati4es)GG

,he specified initial margin range should !e for a period of atleast one continuous monthGGG

Su!ect to !an operating po%ers and !aner7s certificate on credit limits for the !an

account

4 5 4 % e & o r t i n g

SHCI4 pro'ides 'arious reports relating to the trading and settlement of its clients on its "e!site

#These reports can !e do"nloaded !$ the client !$ using a uniue PIN num!er and pass"ord# The

main reports that are pro'ided are :

Dail$ trades reports

8arked1to1market profitEloss reports

Collateral margin reports

Account statements


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0utstanding position reports

Span margins reuirement report three times during the da$ !ased onthe parameters specified

!$ the e&change

8onthl$ ledger reports and an$ other rele'ant report reuired !$ a client is also pro'ided

5 " % D 1 C S

. D D S * . % S

)se the dematerialised shares in $our account as a collateral to get $ou a loan#

1 I ' 1 ;

Purchase shares no" "ithout co1ordinating "ith !rokers or "orr$ing a!out $our settlement

o!ligation at the e&change#

6 1 ) D I ) 8 S

In'est in a "ide range of 8utual 2unds schemes#

< I ' ) D S

Su!scri!e to elief 7onds issued !$ the 30I and hold them in the electronic mode "ith

SHCI4% 7I authorised intermediar$#
http://online.stockholding.com/products/so_goibonds.htmlhttp://online.stockholding.com/products/so_goibonds.htmlhttp://online.stockholding.com/products/so_goibonds.htmlhttp://online.stockholding.com/products/so_goibonds.htmlhttp://online.stockholding.com/products/so_goibonds.html


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I ) S 1 % . ) C

Corporate Agent of 4ife Insurance Corporation for 4ife Insurance products and Ne"

India Assurance for Non14ife Insurance products#

S C K d i r e $ t

Helps $ou com!ine $our !u$ and sell of shares% $our settlement and fund transfer all at one

go#

5 . D D S * . % S

5 I n t r o d u $ t i o n

SHCI4 arranges loan against demat shares#

Tie up "ith reputed !anks "hich offer $ou the most competiti'e interest rates in the market#

Fou can use the shares in $our free account as a collateral and take a loan from an$ of our

empaneled !anks#

=e complete $our documentation and processing and gi'e $ou the cheue "ithin JB hours of

application#

This is a pure 'alue1add to $our depositor$ account "ith us#

ADDshares is a'aila!le at SHCI4 centres in all the ma5or cities#
http://online.stockholding.com/products/so_stockdirect.htmlhttp://online.stockholding.com/products/so_insurance.html


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52 6 e a t u r e s

4oan against demat shares held in the DP account "ith SHCI4#

Competiti'e interest rates from a range of 7anks SHCI4 has tied up "ith#

SHCI4 processes the entire paper"ork reuired "ith the !ank#

The ser'ice is a'aila!le at an$ of o'er *;; !ranches of SHCI4#

5+ . d v a n t a g e s

0ur tie1ups "ith !anks gi'e $ou a "ide range of !anks to choose from# This reads as a "ider

range of specified and non1specified shares to get a loan against#

The ADDshares team helps $ou "ith the paper formalities precedent to a loan#

Fou can no" get a loan at competiti'e interest rates and margins# This is a resultant of our tie1

up "ith a "ide range of !anks#

ADDshares simplifies long1"inded loan procedures for $ou and facilitates earl$ dis!ursement

of funds#

ADDshares is a'aila!le at an$ of our !ranches% num!ering o'er *-;#

5 2 1 I ' 1 ;

52 I n t r o d u $ t i o n


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5 2 + . d v a n t a g e s

7u$ shares "ith a single instruction and get an assured credit of shares into $our account the

ne&t da$ of pa$out# 4ea'e the settlement procedures and !roker interaction to us#

Affect a faster turnaround of $our portfolio#

/ui!u$ has a 'er$ nominal charge attached to it#

An initial ad'ance of s#*%;;; in the Purchase Ad'ance account and replenishments% as and

"hen necessar$% take care of pa$ment for $our purchases#

Choose on the e&change to !u$ $our shares from 7S/ or NS/#

Choose from a range of SHCI4 empaneled !rokers to e&ecute $our purchases#

/ui!u$ from the SHCI4 center closest to $ou# Select from *-; plus SHCI4 centers across the

countr$#

5 + 6 1 ) D I ) 8 S

5 + I n t r o d u $ t i o n

2und In'est is a !asket of financial products% ranging from fi&ed income securities like

2i&ed deposits% Infrastructure !onds and Capital 3ain 7onds to 'aria!le income securities like Initial

Pu!lic 0ffers (IP0s of /uities and 8utual 2unds# It is an attempt to offer financial products that

cater to the 'arious in'estment needs of our esteemed clients# An effort to guide the in'estor to a

product portfolio that !est suits his risk1 return profile#

Applications for in'estments can !e source from an$ of the SHCI4 offices# Apart from guiding our

in'estor to pick up the right com!ination of in'estment instruments% "e help them Mafter1salesM

ser'ice% !$ acting as an interlocutor !et"een the in'estor and the issuer of the securities#


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5 + 2 6 e a t u r e s

At present% "e are distri!uting schemes of -, different 8utual 2unds

All these 2unds offer a "ide 'arieties of in'estment option depending on the risk appetite of the

in'estor# Some of the ma5or categories are:

De!t 2unds: The De!t 2unds ha'e the mandate of in'esting primaril$ in De!t papers

/uit$ 2unds: The /uit$ 2unds ha'e the mandate of in'esting primaril$ in /uities

7alanced 2unds: The 7alanced 2unds ha'e the mandate of in'esting !oth in /uities as "ell as De!t

papers#

Capital 3ains 7onds come under ,J /C Capital 3ains 7onds% "here in'estors get e&emption from

Capital 3ain ta These are Mon 1tap M issues# At present% SHCI4 is distri!uting Capital 3ain 7onds of

ural /lectrification Corporation% National Housing 7ank% Small Industries De'elopment 7ank of

India and National High"a$ Authorit$ of India#

Infrastructure 7onds are issued !$ ICICI 7ank and ID7I% "ith Section BB as the main feature

Pri'ate Placements: De!t papers issued for Pri'ate Placement "ith Structural 0!ligations !$ the

State and Central 3o'ernment% t$picall$ targeted for Trusts and Pro'ident 2unds% are distri!uted !$

Stock Holding#

2i&ed Deposits: 2i&ed Deposits "ith high in'estment rating and issued !$ !lue1 chip corporate are

distri!uted !$ us# These papers generall$ offer ,; to *;; !asis points more than !ank fi&ed deposits

of compara!le period# At present% "e are distri!uting ID7I Su'idha 2i&ed Deposits and HD2C 2i&ed

Deposits#

Initial Pu!lic 0ffer: IP0s offered from !lue1chip corporate can !e su!scri!ed from Stock Holding#Issues recentl$ distri!uted !$ us are Canara 7ank% Allaha!ad 7ank% 7harti Tele and I1 2le&
http://online.stockholding.com/products/fundzinvest/so_fi_listofmf.htmlhttp://online.stockholding.com/products/fundzinvest/so_fi_listofmf.html


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5 4 < I ' ) D S

5 4 I n t r o d u $ t i o n

Sa'ings 7onds are issued !$ 7I on !ehalf of 3o'ernment of India in the follo"ing series#

0L taa/!e /onds

These 7onds are held in electronic form in an account called 7ond 4edger Account (74A# 7ond

4edger Accounts can !e opened and operated "ith 7I designated ecei'ing 0ffices# SHCI4 has

!een designated as one of the ecei'ing 0ffices !$ 7I for this purpose# Su!scriptions for Sa'ings

7onds can !e su!mitted at an$ of our !ranches#

Sa'ings 7onds !eing so'ereign in nature are a!solutel$ safe and an attracti'e in'estment option in

the current 'olatile market situation#

The follo"ing categories can su!scri!e to Sa'ings 7onds :

Categor( of Investor0L

aa/!e

Individua!

his or her indi'idual capacit$#

indi'idual capacit$ on 5oint !asis

indi'idual capacit$ on an$one or sur'i'or !asis

0n !ehalf of a minor as fatherEmotherElegal guardian

*16 *indu 1ndivided 6ami!(


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Charita/!e Instituition

Charita!le Institution to mean a Compan$ registered

under Section -, of the Indian Companies Act *+,@

An Institution "hich has o!tained a Certificate of

egistration as a Charita!le Institution in accordance

"ith a la" in force

An$ institution "hich has o!tained a certificate from

Income ta& Authorit$ for the purposes of Section

B;3 of the Income Ta& Act% *+@*

1niversit(

)ni'ersit$ means a )ni'ersit$ esta!lished or

incorporated !$ a Central% State or Pro'incial Act

and includes an Institution declared under section .

of the )ni'ersit$ 3rants Commission Act% *+,@ to !ea )ni'ersit$ for the purposes of that Act

5 4 2 6 e a t u r e s

The salient features of the 7onds are listed !elo" :

Feature 8.0% (Taxable)

In4estment "imitMinimum in4estment is Rs.0/// and there is no ma&imum

limit

Interest Option$aya!le half yearly on 0st 8e!+ 0st Aug or cumulati4e onmaturity.

,a& BenefitsInterest is ta&a!le under I, Act 09:0. E&empt from ;ealth,a& under ;ealth ,a& Act 09

Functional Operations at SCHIL

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Transcript of Functional Operations at SCHIL