PIONEER INSTITUTE OF

PROFESSIONAL STUDIES

MINOR RESEARCH PROJECT

ON

TO STUDY CONSUMER PREFERENCE WITH RESPECT TO

OPENING A DEMAT ACCOUNT IN SELECTED PRIVATE
COMPANIES IN INDORE

Submitted by:-
Dr. Ajay Joshi Hitesh Bhagwani
Harish Dangi
Jyoti Mishra
Govind Puri Goswami
Jaypal Singh Niranjan
Jai Pratap Singh
 CONTENTS
• INTRODUCTION
• RATIONALE
• OBJECTIVES
• LITERATURE REVIEW
• RESEARCH METHODOLOGY
• RESEARCH TYPE
• POPULATION
• SAMPLE
• SAMPLING METHOD
• TOOLS FOR DATA COLLECTION
• TOOLS FOR DATA ANALYSIS
• EXPECTED OUTCOMES
• REFERENCES
INTRODUCTION:

Meaning of demat account: It is an account which can be compared to a bank

account wherein here your shares are in electronic form with its respective value (either
purchase price or selling price).
The term Demat refers to a dematerialized account for individuals to trade in
listed stocks or debentures, required for investors by The Securities Exchange Board of
India (SEBI). In a demat account, shares and securities are held electronically instead of
the investor taking physical possession of certificates. A Demat Account is opened by the
investor while registering with an investment broker .A Demat account has to be opened
if you want to buy and sell shares, securities and debentures.
In simple words, instead of having shares in paper form we are having it in
electronic form. many people get confused between trading & demat account but these
both are different terms:

Demat Account : Account where your Shares are stored in electronic form .

Trading Account : An account which is used to place orders for Buying and Selling
of shares

Depository Participant (DP): A Depository Participant (DP) is an agent of the

depository through which it interfaces with the investor and provides depository services.
Public financial institutions, scheduled commercial banks, foreign banks operating in
India with the approval of the Reserve Bank of India, state financial corporations,
custodians, stock-brokers, clearing corporations /clearing houses, NBFCs and Registrar to
an Issue or Share Transfer Agent complying with the requirements prescribed by SEBI
can be registered as DP. Banking services can be availed through a branch whereas
depository services can be availed through a DP.
 • The work flow when you buy a share

CONCEPTUAL FRAMEWORK: This study is made to analyzing the opportunities,

challenges & drivers that play a vital role in the investment of the persons who want to invest in
share market. In this study we will study what are the things on which people choose their stock
broking companies, what are the qualities on the basis of which they rate these stock broking
companies what are the advantages of opening these accounts what is the procedure of opening
these accounts, what are the services provided by these companies & the companies available to
open the demat account.

Advantages of Demat
The demat account reduces brokerage charges, makes pledging of shares easier, enables quick
ownership of securities on settlement resulting in increased liquidity, avoids confusion in the
ownership title of securities, and provides easy receipt of public issue allotments.

It also helps avoid bad deliveries caused by signature mismatch, postal delays and loss of
certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting, and loss
due to damage stock certificates. Demat account holders also avoid stamp duty (as against 0.5 per
cent payable on physical shares), filling up of transfer deeds, and obtain quick receipt of benefits
like stock splits and bonuses.
 • Document Required for Resident Indian to open a Demat account
1. Application form
2. Pan card copy
3. Valid Identity Proof
4. Valid Address Proof
5. Photograph

• Some of the private companies available to open a demat account:

• ICICI direct.com
• India Infoline
• Kotak Securities Ltd.
• Share Khan
• Indiabulls
• Motilal Oswal
• Bajaj Capital
• karvy
• Angel Broking
• Reliance Money

Indian Market Scenario:

Indian capital market has seen unprecedented boom in its activity in the last 15 years in terms of
number of stock exchanges, listed companies, trade volumes, market intermediaries, investor
population, etcUntil the late eighties, the common man kept away from capital market and thus
the quantum of funds mobilized through the market was meager. A major problem, however,
continued to plague the market. The Indian markets were drowned in shares in the form of paper
and hence it was problematic to handle them. Fake and stolen shares, fake signatures and
signature mismatch, duplication and mutilation of shares, transfer problems, etc. The investors
were scared and were under compensated for the risk borne by them. The century old system of
trading and settlement requires handling of huge volumes of paper work. This has made the
investors, both retail and institutional, wary of entering the capital market. Since the paper work
was not matching the rapid growth so there was a need for a better system to ensure removal of
these impediments. Government of India decided to set up a fully automated and high technology
based model exchange that could offer screen-based trading
Object Of Demat System
India has adopted this system of electronic bookkeeping, eliminating the need for paper
when shares or securities are held in electronic form. Before the introduction of the
depository system by the Depository Act, 1996, the process of sale, purchase and transfer
of shares was difficult and there was a high risk of loss.

Other benefits of demat account

The benefits demat are as follows:

• It's a safe and convenient way to hold securities

• Immediate transfer of securities is there
• There is no stamp duty on transfer of securities
• Elimination of risks associated with physical certificates such as bad delivery, fake
securities, delays, thefts etc.
• There is a major reduction in paperwork involved in transfer of securities,reduction in
transaction cost etc.
• No odd lot problem, even one share can be sold thus there is advantage
• Change in address recorded with DP gets registered with all companies in which investor
holds securities electronically eliminating the need to correspond with each of them
separately
• Transmission of securities is done by DP eliminating correspondence with companies;
• Automatic credit into demat account of shares, arising out of
bonus/split/consolidation/merger etc.

Benefit to the Company:

• The depository system helps in reducing the cost of new issues due to less
printing and distribution cost.
• . It increases the efficiency of the registrars and transfer agents and the
Secretarial Department of the company
• It provides better facilities for communication and timely services with shareholders,
investor etc
• It ensures transfer settlements and reduces delay in registration of shares.
• It ensures faster payment on sale of shares.
Benefits to Brokers:

• The depository system reduces risk of delayed settlement

• It ensures greater profit due to increase in volume of trading.
• eliminates chances of forgery – bad delivery
• It increases overall of trading and profitability. It increases confidence in investors.

Demat conversion:
Converting physical records of investments into electronic records is called
dematerialising securities. In order to dematerialise physical securities investors must
 fill in a DRF (Demat Request Form) which is available with the DP and submit the
same along with physical certificates, other important things are as follows:

• Surrender certificates for dematerialisation to your depository participant.

• Depository participant intimates Depository of the request through the system.
• Depository participant submits the certificates to the registrar of the Issuer
Company.
• Registrar confirms the dematerialisation request from depository.
• After dematerialising the certificates, Registrar updates accounts and informs
depository of the completion of dematerialisation.
• Depository updates its accounts and informs the depository participant.

Depository participant updates the demat account of the investor

Fees Involved:
There are four major charges usually levied on a demat account: Account opening
fee, annual maintenance fee, custodian fee and transaction fee. All the charges vary
from DP to DP.

Account-opening fee
Depending on the DP, there may or may not be an opening account fee. Private banks, such
as HDFC Bank and UTI Bank, do not have one. However, players such as ICICI Bank, Globe
Capital, Karvy Consultants and the State Bank of India to do so. But most players levy this
when you re-open a demat account, though the Stock Holding Corporation offers a lifetime
account opening fee, which allows you to hold on to your demat account over a long period.
This fee is refundable

Annual maintenance fee

This is also known as folio maintenance charges, and is generally levied in advance

Custodian fee
This fee is charged monthly and depends on the number of securities held in the
account. It generally ranges between Rs 0.5 to Rs 1 per ISIN per month. DPs will not
charge custody fee for ISIN(international securities identification numbers) on which
the companies have paid one-time custody charges to the depository

Transaction fee:
The transaction fee is charged for crediting/debiting securities to and from the
account on a monthly basis. While some DPs, such as SBI, charge a flat fee per
transaction, HDFC Bank and ICICI Bank peg the fee to the transaction value, subject
to a minimum amount. The fee also differs based on the kind of transaction (buying
 or selling). Some DPs charge only for debiting the securities while others charge for
both.

In addition to the other fees, the DP also charges a fee for converting the
shares from the physical to the electronic form or vice-versa. This fee varies for both
demat and remat requests.

• VARIABLES:

1. Consumer preference: As we all know that consumer preference play a vital

role in every field of marketing as today’s market is consumer based & every
single company now a days is trying to predict the consumer behavior thus we
have taken as a variable

2. Consumer satisfaction: For the success of any company the satisfaction of the
consumers is very necessary & every company these days is trying their best to
make their consumer satisfied.

3. Consumer expectations: After investing in any company the consumer expects

that they get their investment back & thus their investment effects the working a
lot

RATIONALE:
This study will help the in knowing us which is the best company or which company provides the
best facilities to the customers. Our objective is to know the kind of services provided by the
stock broking companies, the procedure of opening the account & the advantages of these
accounts.

OBJECTIVE:

To find the level of customer preference towards opening a DEMAT account

LITERATURE REVIEW:
1. PROJECT REPORT ON “Demat Account Angel Broking”
By: -Name –Raju Goyal
International Institute of e-Business Management MOHALI Year -2009
• To find the market potential and market penetration ofangel broking product
offerings in Panchkula, Zirkpur, and local area nearby them.
• To collect the real time information about preference level of customers using
Demat account and their inclination towards various other brokerage firms e.g.
• India bulls, Share khan, India in foline, Religare, Alan- kit,Unicon.
• To expand the market penetration of Angel broking ltd.
• To provide pricing strategy of competitors to fight cut throat competition.
• To increase the product awareness of Angel broking as single window shop for
investment solutions

2. INVESTORS PERCEPTION TOWARDS DEPOSITORY SERVICES

PROVIDED BY PRIVATE SECTOR BANKS

DR. A. RAMAKRISHNAN,RUCHIMALHOTRA

• It shows that 54% of the investors consider multiple reasons out of above, while
making decision regarding opening of Demat account with the specific bank
• It also shows that 22% of the investors open their demat account with the specific
bank because of past dealing with that bank, followed by those investors who
prefer better services of specific
• It also shows that very small number of investors prefer to open their demat
account with the specific bank because of easy accessibility, low maintenance
charges
• It shows that people open demat accounts on friends recommendations, which is
6%, 4% and 2% respectively

3.As per the findings of project report on

“CUSTOMER PREFERENCE TOWARD PRIVATE vs. PUBLIC SECTOR
BANKS DURING RECESSION”
 Service class people, Students, Senior citizens, Housewives, domestic help and
shopkeepers prefer public banks whereas lecturers and businessmen prefer private
banks.

 Services of Private Banks are better but are low preferred because of lack of
security of private banks.

 In future public bank account holders are likely to shift to private banks, given the
good economic conditions

RESEARCH METHODOLOGY
 • We will use primary data as we are using questionnaire method & secondary data as well,
as we are preferring the old researches & journals

LIMITATIONS OF THE RESEARCH:

• This research is limited to indore only
• We are taking only private companies in this research

RESEARCH TYPE: Our research will be exploratory research

POPULATION:

All the customers of demat account opening companies in Indore will be the population size of
our study.

SAMPLE:

We will have a sample of 50 respondents.

SAMPLING METHOD:

We will be using Non -probability convenient sampling technique.

TOOLS FOR DATA COLLECTION:

• Questionnaire method
• Different websites

TOOLS FOR DATA ANALYSIS:

• Z test

EXPECTED OUTCOMES
We are expecting that customer select the companies on the basis of the account opening charges.

REFERENCES:
http://www.ShareKhan.com
http://www.chittorgarh.com/newportal/online-stock-brokers-detail.asp?a=2
http://www.angeltrade.com
http://www.chittorgarh.com/newportal/online-stock-brokers-detail.asp?a=6
http://www.chittorgarh.com/newportal/online-stock-brokers-detail.asp?a=3
http://www.chittorgarh.com/newportal/online-stock-brokers-detail.asp?a=4