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Capital market is a market for long-term funds. Capital market channelises household savings to the corporate sector and allocates funds to firms. In this process, it allows both firms and households to share risks associated with business. Moreover, capital market enables the valuation of firms on an almost continuous basis and plays an important role in the governance of the corporate sector.

An efficient capital market is an important constituent of a sound financial system. In India, efforts have been made in recent years to set up an effective regulatory framework covering major participants in the capital market. Similarly, the technology of trading and settlements in the stock exchanges has been upgraded. Internet-based trading in securities has been permitted. The market has undergone a major transformation in terms of its structure, products, practices, spread, institutional framework and other important aspects like transparency, integrity and efficiency. The size of the market has also grown manifold.

Shares are traditionally held in physical (paper) form. This method has weaknesses like loss/theft of certificates, forged/fake certificates, cumbersome and time-consuming procedures for transfer of shares etc. To eliminate these weaknesses, a new system called depository system has been established. A depository is a system which holds shares of an investor in the form of electronic accounts in the same way a bank holds money of a depositor in a savings account. A depository holds securities in dematerialised form. It maintains ownership records of securities in a book entry form and also effects transfer of ownership through book entry.

This book presents glimpses of the evolution of capital market in India during the post-Independence period. More importantly, it provides deep insights into the functioning of depository system in India through sample surveys.