A depository is an entity that holds securities/shares of its account holder in electronic form through a registered Depository Participant (DP). It holds no physical certificates but communicates with companies, or their agents, by electronic means. It can be compared with a bank, which holds funds for its depositors. Following table explains the bank-depository analogy:
| BANK | DEPOSITORY |
| Holds funds in an account | Hold securities in an account |
| Transfers funds between accounts on the instruction of the account holder | Transfers securities between accounts on the instruction of the account holder |
| Facilitates transfer without having to handle money | Facilitates transfer of ownership without having to handle securities |
| Facilitates safekeeping of money | Facilitates safekeeping of securities |