BOI Shareholding Ltd. (BOISL) – BOISL, a joint venture between Bank of India and BSE, undertakes the clearing of trades executed on BSE.
The National Securities Clearing Corporation Ltd. (NSCCL) – NSCCL is a wholly owned subsidiary of the National Stock Exchange (NSE) and undertakes the clearing of trades executed on the NSE, and operates Subsidiary General Ledger (SGL) for settlement of trades in government securities. It assumes the counter-party risk of each member and guarantees financial settlement. It also undertakes settlement of transactions on other stock exchanges like, the Over the Counter Exchange of India.
Clearing Corporation of India Ltd. (CCIL) – The Clearing Corporation of India Ltd. (CCIL) is a company registered under the Companies Act, 1956 with an equity capital of Indian Rupee (INR) 500 million. State Bank of India (India’s largest nationalized bank) promoted CCIL to undertake clearing and settlement of dealings in government securities and money market instruments operated or reported through NDS. CCIL also facilitates clearing and settlement of foreign exchange transactions.
National Securities Depository Ltd (NSDL) and Central Depository Services (India) Ltd (CDSL) – act as depositories for Equity, Corporate Debt and some Government Securities. They are incorporated under the Companies Act, 1956 as public limited companies limited by shares and are for profit institutions. NSDL and CDSL facilitate clearing of trades through depository participants, by enabling securities transfers across beneficial owners, inter-se and to/from clearing members, based on transfer instructions.
Investors are permitted to open accounts only through depository participants and not directly with the depository. However, the depositories maintain record of beneficial ownership details of all depository account holders. A depository participant can be a bank, financial institution, a custodian, a broker or any entity eligible as per SEBI (Depositories and Participants) Regulations, 1996.
Depositories maintain a three-way interface between the Stock Exchanges, the depository participants and the issuer companies / registrars and transfer agents (R&T). The depositories are electronically linked to each of these via a satellite link or through leased land lines.
Reserve Bank of India (RBI) – is the depositary for dated government securities and treasury bills. RBI was established under an act of parliament (The Reserve Bank of India Act, 1934). Investors (Constituents) can hold securities through members of RBI only. Members of RBI hold a securities account for this purpose tilted Subsidiary General Ledger (SGL) account and under this account, the members maintain securities holdings of their constituents i.e. clients. Such accounts are termed as Constituent Subsidiary General Ledger (CSGL) accounts.
Cash clearing is both manual and electronic, in the case of manual clearing the payments are effected by delivery of cheques. High value cheques (exceeding INR 100,000), if delivered by 11:00, are cleared by end of day.
RBI has also, effective March 26, 2004, initiated Real Time Gross Settlement (RTGS) of funds. This system is currently used for inter-bank transactions (mechanism for settlement of bank to bank obligations using funds maintained by the banks with RBI) as well as customer transactions. Funds movements relating to securities market transactions are routed either through the physical clearing system or through RTGS.
Local regulations in India do not permit funding of FII investment through overdraft or other sources. Regulations also prescribe aggregation relationships, therefore, zero balance accounts, pooling etc. is not available across sub-accounts of a FII, or across FIIs for a global custodian. Further, clients do no not earn any interest on cash accounts they hold.