Question

Should a custodian bank also be a depository participant

Answer 1

What is the difference between a depository and a custodian?

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3 ANSWERS



Ankit Arora, Capital Markets Consultant (11+ yrs exp)

Answered Mar 10, 2016

This is a very good question. I have been in capital markets since last 10+ yrs and most people still ask me this query. The difference is in the name itself. Custodian means custody and Depository means where you deposit! So custodian will have your shares or holdings but legally those will be kept in a safe-keeping account with a Depository.

So it is the Depository which will have your shares in a dematerialised form!

I agree with the answer here by Nemil..

For more details, you may also check this link which I found useful..

Answer 2

In a nutshell, custody is a function of depository and so each depository is a custodian, but custodian is not a depository. So, basically the main difference is that the legal ownership of assets lie with Depository and not with custodian.