InvestorQ : What recourse do I have if my DP shuts shop? What happens to my shares?
Chandralekha Desai made post

What recourse do I have if my DP shuts shop? What happens to my shares?

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NISHA Nayak answered.
2 years ago

Actually, nothing happens to your shares because your shares are in the custody of one of the national depositories (NSDL or CDSL). That depends on whether your DP account is an NSDL account or a CDSL account. You may remember that back in 2006 when the SEBI ordered Karvy and Indiabulls to shut down their demat business following the IPO scam; there was a big worry among the investors who had shared with these two DPs. The primary concern was whether all their demat shares will simply evaporate into thin air. That is hardly surprising because in the demat scenario nobody holds share certificates in physical form. After all, the only thing you think you have is a holding statement and a transaction statement. Not surprisingly, many sizable investors were really worried that they had actually lost all their holdings. You can just relax; your dematerialized shares are with NSDL or the CDSL and they are absolutely safeā€¦
This is an interesting aspect for you to know. When you open a demat account, you have to indicate to your DP whether you want to actually open the demat account with the NSDL or CDSL. The National Securities Depository Ltd. (NSDL) and the Central Securities Depository Ltd were (CDSL) were floated by the NSE and the BSE respectively. Both the institutions are backed by large banks, insurance companies and other institutions that are owned by the government and the shares held with the two depositories are protected under SEBI regulations. Your shares are actually held by one of these depositories. The Depository participants (DPs) like IIFL, Karvy, Motilal Oswal, Angel, ICICI Bank, HDFC Bank etc are the depository participants (DPs) who just hold and administer these shares in custody on behalf of the NSDL or the CDSL. For all practical purposes, you do not worry about the safety of your shares held with your DP. They are as safe and secure as any asset can be.