Question

Justify the following statement.

Depository System has a very important role to play in the successful functioning of the capital market.

Answer 1

The Depository System has a very important role to play in the successful functioning of the capital market.

1. It aims at eliminating the huge volume of paperwork involved in paper or scrip-based systems.
2. It offers scope for paperless trading by using state-of-the-art technology.
3. It leads to the elimination of storage and handling of certificates.
4. It reduces the cost and efforts involved in the storage and handling of physical certificates.