How is Depository System similar to a bank? What is the difference?
Ans. As cash deposits and withdrawals are made in a bank, in lieu of which a receipt and a passbook are given, similarly, in depositories, scrips are debited and credited and an account statement is issued to the investors from time to time. It is a kind of bank account in which instead of cash securities are deposited and sold through sale and purchase.
One difference is there in two systems: An investor in a bank deals directly with a bank while in a depository, an investor deals through a depository participant.
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