This study is an attempt to understand the structure of the depository system in India i.e. NSDL and CSDL. The traditional stock trading system involves dealing in share certificates with enormous paper work, obtaining an approved certificate in the name of the buyer, which is complex and time-consuming and also involves several problems not only of bad deliveries of shares but also the loss of certificates of stocks in transition. In that system, shareholder’s securities are maintained electronically by converting physical securities into an electronic form through a process called "dematerialisation" of share certificates and facilitating transactions electronically without involving any share certificates or transfer deed. On the basis of this study we can understand the basic structure, functions of depository system, benefits of depository system and facilities given by depository system in India.

KEYWORDS: Depository Participants, Dematerialization & Rematerialization and Demat Account.