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