Basics of Insurance
Indian Securities Market - Overview
Market Regulator SEBI
Stocks and
Commodities Other
Depositories
Derivative Intermediaries
Exchanges
Stock Brokers,
NSE, BSE, MSE, RTAs, Mutual
NSDL, CDSL
MCX etc. Funds, Investment
Advisors etc.
Starting Investment in Securities Market
Accounts Required
Bank Account Trading or Broking Account Demat Account
Many DPs offer a 3-in-1 account opening facility which gives you the convenience of opening a trading, demat and bank
account – all together. Now many DPs are offering online demat account opening. Trading or Broking account is
required only if you want to buy / sell shares through stock exchange.
Indian Securities Market - Depository System
Issuer Company / RTA
Clearing Corporation (NSE Clearing Limited/
Other Depository Indian Clearing Corporation Limited)
DP 1 DP 2
Stock Broker / Stock Broker /
Trading Member 1 Investor 1 Investor 2 Clearing Member 2
Services offered by Depository Participant
Account Opening Change in account details
Demat*, Remat of securities, Account freeze
Conversion & Redemption of (Account level, ISIN level
Mutual Fund Units and Quantity level)
Transfer of securities** Pledge and Margin Pledge of
securities
*Even unlisted shares can be dematerialized. **Transfer of securities held in physical form not allowed w. e. f. April 1, 2019. Re-lodgement of
transfer deeds which were submitted prior to this, but were rejected or returned, was allowed till March 31, 2021. Shares pending for transfer
with listed company / its RTA shall be issued only in demat.
Pledge Creation and Confirmation
Depository
Pledgee’s DP Pledgor’s DP
Pledge created Request
Confirmation*
Pledgee Agreement Pledgor
(Lender) (Borrower)
Loan
* Not needed if Pledge Standing Instruction is enabled
Pledge Closure (Normal)
Depository
Pledgee’s DP Pledgor’s DP
Confirmation Pledge closed Request
Pledgee Agreement Pledgor
(Lender) (Borrower)
Repayment of Loan
Pledge Invocation
Depository
Pledgee’s DP Pledgor’s DP
Request Pledge invoked
Securities
Pledgee Pledgor
(Lender) (Borrower)
Notice
SMART Online Dispute Resolution (SMART ODR) Mechanism
1. An investor/client (including institutional/corporate client) shall first take up grievance
directly with the Market Participant by lodging a complaint.
2. If the grievance is not redressed satisfactorily, the investor/client may escalate through
SEBI SCORES.
3. If the investor/client is still not satisfied with the outcome, then the investor/client can
initiate ODR through the SMART ODR portal.
4. An investor/client can initiate dispute through ODR if grievance is lodged directly with
Market Participant and remains unresolved; OR after lodging grievance on SCORES and
is not satisfactorily resolved.
5. Market Participant may also initiate dispute through the ODR Portal by giving notice
period of 15 calendar days to the investor/client for resolution of the dispute, which is
not resolved.
6. For more information, visit SEBI Circular No. SEBI/HO/OIAE/OIAE_IAD-
3/P/CIR/2023/195 dated July 31, 2023 on SEBI website.
Stages of SMART ODR
Key points on Anti-Money Laundering
Legislative and Regulatory References
• Prevention of Money Laundering Act, 2002
• Prevention of Money Laundering (Rules), 2005
• SEBI Master Circular – October 15, 2019
What is Money Laundering (ML)?
• Money Laundering is “the process in which the proceeds of crime are converted and disguised as
legitimate assets”
What is Anti-Money Laundering (AML)?
• Anti-Money Laundering is “the initiative to effectively prevent, detect, control and report ML
activities to the authorities”
What are Suspicious Transactions?
Transactions (including attempted transactions), that may involve proceeds from a predicate offence, do not
have any economic rationale, made in circumstances of unusual or unjustified complexity or gives rise to a
reasonable ground of suspicion that it may involve financing of activities relating to terrorism
Key Authorities – Financial Intelligence Unit (FIU-IND), Ministry of Home Affairs and the Enforcement Directorate
Key points for all Investors
Individuals:
• Provide officially valid documents for proof of identity and address
• Furnish correct information on income, occupation, business, marital status, etc.
• Provide accurate financial information – salary or business income as applicable
• Inform about any changes to the above information
• Invest only using own sources of funds, not third party funds
• Do not fall prey to any gimmicks or schemes from anyone
Non – Individuals:
• Provide officially valid documents for proof of identity and address
• Furnish information about Beneficial Owner(s), where applicable
• Furnish all other related documents (AoA, MoA, Partnership deed, ASL, etc.)
• Provide correct information about nature and type of business
• Changes to the above information may be duly informed to DPs
Cooperate with DPs who may seek any additional information for due diligence
Be diligent and aware about various money laundering schemes
Contact your DP or broker in case of any doubts
Be a Prudent Investor
Keep record of documents signed, account statements, contract notes
received and payments made. Save important emails and take periodic back
up of data.
BO may note that off-market transfer of shares leads to change in ownership
and cannot be treated as pledge.
Change password of your online accounts frequently.
Never share your passwords, OTP, CVV and PIN with any one.
Never click on suspicious links received via SMS, email or social media
platforms.
Read SMS, emails, letters, statements, bills sent by your broker, bank, DP and
NSDL. These are sent to you to keep you updated.
Accept the DIS only if serial number is pre printed and Client ID is pre stamped
or pre printed. Keep DIS in safe custody. Do not to leave the DIS “blank or
signed” with the Depository Participants (DPs) or any other person/entity when
not in use.
Be a Prudent Investor
• Inform your DP about any change in your Personal Information such as
address, bank account immediately.
• If your DP is offering you an online account opening facility, you also have
the facility to close your account online.
Always mention your Mobile Number and email ID in account opening form
and keep them updated.
NSDL publications and presentations are available in Hindi, English and other
languages at www.nsdl.co.in → Education
Schedule of Awareness Programs, Registration, Feedback and Webinar
Recordings are available at www.nsdl.co.in → Education
Be a Prudent Investor – Don’ts
Never deal with any unregistered or unauthorised market intermediary. Check
on the SEBI’s website that your stock broker / authorised person, mutual fund
distributor, investment advisor are registered with SEBI.
Never invest with borrowed money. Avoid unnecessary loans and credits.
Be a Prudent Investor
Be a Prudent Investor
Be a Prudent Investor
Be Vigilant! Invest through a
SEBI registered Intermediary
Investors are advised to stay away from
fraudulent schemes/Apps promising
unrealistic returns.
Beware of impersonators !!
For more information on NSDL Depository
Participants registered with SEBI, visit
https://nsdl.co.in/direct_search.php on
NSDL website.
For SEBI registered Intermediaries,
visit SEBI | Recognised Intermediaries
on SEBI website.
SEBI Complaints Redressal System - SCORES 2.0
For more information, visit https://scores.sebi.gov.in/scores-home
Dharohar – Milestones in the Indian Securities Market
Get ready to explore the transformation of India's
securities market!
SEBI's 'Dharohar' platform offers a unique
glimpse into the market's growth over the years.
For more information, visit https://mism.org/
Be a Prudent Investor
SEBI Launches Free Online Investor Certification Examination
Enhance your investment knowledge and test your skills with this voluntary certification program
For more information, visit
SEBI Investor Website (https://investor.sebi.gov.in/)
NISM website (https://www.nism.ac.in/sebi-investor-
certification-examination/).
SEBI Investor Website
Learn to Manage Your Money for Financial well-being.
For more information related to investments in securities market, please visit SEBI
Investor Website https://investor.sebi.gov.in
SEBI Saa₹thi 2.0 Mobile App
For more information related to investments in securities market, please visit SEBI
Investor Website https://investor.sebi.gov.in/ and SEBI Saa₹thi Mobile App
If You are holding Securities in Paper form
1. Provide PAN, KYC information and Nomination to RTA / Company for all joint
holders.
2. Get PAN and Aadhaar linked for all joint holders.
3. Folio may be frozen if not complied.
4. Electronic interface provided by company / RTA for various service requests
like issuance of duplicate shares, transmission, change in name etc.
5. SEBI has prescribed ‘Simplified and Standard Norms’ for processing of
various service requests [Form ISR – 1 and other forms available on website
of listed company / RTA].
Lodge complaints for Unsolicited Communication and fraudulent
activities using telecom resources
In case of Unsolicited Communication and fraudulent activities using telecom
resources, you can lodge complaints as follows:
a) In case of receiving spam or commercial communication make “DND” complaint at
respective Telecom Service Provider’s App/Website, TRAI DND App, or Call/SMS to
1909
b) In case of receiving suspected fraud communication, report the same to “Chakshu
Platform” of DoT (https://sancharsaathi.gov.in/sfc/Home/sfc-complaint.jsp)
c) In case fraud has already happened Report the same to Cyber Crime helpline number
1930 or website (https://www.cybercrime.gov.in)
Grievances Redressal
1. Read Investor Charter at www.nsdl.co.in → Education
2. Lodge your complaint with SEBI at https://scores.sebi.gov.in/ or
SEBI Saa₹thi Mobile App.
3. For filing dispute for resolution by conciliation and arbitration, visit
SEBI’s Securities Market Approach for Resolution Through ODR
(SMART ODR) Portal https://smartodr.in/login
4. SEBI Toll free helpline - 18002667575 / 1800227575
5. NSDL helpline - 022-48867000
6. Online submission of Grievances at www.nsdl.co.in → Query
related to Demat
7. NSDL email for grievance - relations@nsdl.com
8. NSDL email for other information - info@nsdl.com
NSDL Newsletter for Investors
The Financial Kaleidoscope – Free monthly newsletter
Newsletter – The
www.nsdl.co.in Education
Financial Kaleidoscope
Basics of Insurance
What is Insurance?
1. Insurance is a financial product that reduces or
eliminates the cost of probable loss of life or
some asset.
2. Insurance is a risk transfer tool. By taking an
insurance policy, you transfer risk to insurance
company.
3. Insurance company assumes risk against
premium paid by many persons.
4. Insurance company pays to those who actually
suffer the loss and claim.
Why Insurance?
Insurance does not reduce the Certain insurance are mandatory,
probability of occurrence of adverse e.g. motor insurance
events
It just helps you to manage the financial Buying certain type of insurance helps
impact or amount of loss if the adverse in saving income tax also, e.g. life
event actually take place insurance and health insurance
Remember Insurance should not be taken just for saving tax Insurance should not be taken as investment primarily
Popular Types of Insurance
Life Insurance Non Life or General Insurance
1. Term insurance 1. Health Insurance
2. Whole life 2. Travel Insurance
3. Endowment 3. Motor Insurance
4. Unit Linked Insurance Plan or ULIP 4. Home Insurance
5. Money back
6. Retirement plan
7. Child Insurance
8. Annuity or Pension plan
Insurance Sector in India
• Insurance Regulatory and Development Authority of India (IRDAI) is the regulator.
• There are many players offering numerous products to suit various needs.
IRDAI
27 27
General Insurers
Life Insurers
Complete list available at www.irdai.gov.in > Home >> Insurers
Do You need Insurance?
You need insurance if you feel that the financial impact or amount of loss on account of
occurrence of the adverse event will be difficult to manage.
Examples
1. You need to buy life insurance policy if you are the one of the earning member of your
family. You do not buy Life Insurance because you are going to die. You buy life
insurance because someone else is going to live after you and they will need money.
2. You need to buy health insurance if you or your family member may fall sick and the
expected cost of treatment will be difficult for you to be bear.
How to Choose Life Insurance Policy?
Important parameters which one should consider before selecting a
life insurance policy -
1. Your current income and expenses
2. How much money your family may need
when you are not there?
3. How much premium you can afford?
4. Insurer’s claim settlement record
5. Policy exclusions
What should be the Life Insurance Sum Assured?
1. It is important to buy an insurance policy. Equally important is to
ensure that insurance amount or coverage is adequate.
2. Sum Assured Amount should be sufficient to ensure that your
family members (dependents) are able to maintain same life style
in your absence.
3. As a general rule, coverage should be 10 to 25 times of your gross
annual income, depending your age.
4. Add the amount of liabilities (home loan or other loans) to above
amount to arrive at minimum coverage amount.
What is Free Look Period?
1. It is period during which a policy holder can
review the policy terms and if not satisfied, may
return the policy with any penalty or charge.
2. Certain expenses like medical check-up expenses
incurred, stamp duty paid etc. can be recovered
by insurance company.
3. 15 days Free Look Period is available for all Life
Insurance policies after date of issuance of
policy.
4. It is available for health insurance policies which
a term of at least three years.
5. If any claim is made before the end of the Free
Look period, then policy can not be returned.
What is the Grace Period?
1. Grace period is additional time the insurance provider
gives after the premium due date to pay your premium.
2. The grace period is 30 days if premium is paid annually.
For other premium frequencies, its 15 days.
3. Life cover continues during the grace period.
4. Health insurance cover is not available during the grace
period.
Lapse Of Policies - Revival
1. Insurance policy lapses when the insured defaults on the
payments of renewal premium beyond grace period.
2. When the policy lapses, its benefits also lapse.
3. Insurance companies generally provide an option to
reactivate the lapsed policy.
4. This option is generally available for a limited time – revival
period, after the grace period.
5. During the revival period, the policy can be reinstated or
revived subject to certain conditions such as payment of due
premium with interest, proof of good health.
6. It’s a good feature using which policyholders can continue to
enjoy policy benefits even when they might have missed the
premium payment.
7. Revival of lapsed policy may be a cheaper option than buying
a new cover.
Health Insurance: How To Buy Insurance?
Important parameters which one should consider before selecting a health insurance
policy -
1. Coverage of various diseases including pre-existing
diseases
2. Minimum period of hospitalization required
3. Pre and post hospitalization expenses
4. Various limits and sub limits
5. Coverage of OPD expenses
6. Critical illness coverage
7. Exclusions
8. Cashless facility
9. Acceptability and network of empanelled hospitals
10. Cost of health check-up
Whom To Buy Insurance From?
Some of the common channels to buy insurance
are:
1. Directly from the insurance company
2. Individual Agents
3. Corporate Agents (e.g. Banks)
4. Insurance Brokers
5. Web Aggregators
Difference Between an Agent and Broker
An insurance broker represents you as the client whereas an Insurance Agent represents
the company they are engaged by.
An Insurance Broker is interested in An Insurance Agent sells, negotiates, or
selling, buying or negotiating various promotes financial products on behalf of
financial products best suited to their his / her organization.
individual client’s needs for
compensation
Whom To Buy Insurance From - Online Or Offline?
Why Online? Why Offline?
1. Lot product information is available in a 1. Insurance products are complicated and
user friendly format. sometimes difficult to understand on your
2. Wide comparison features available – own.
across products and companies. 2. Premium negotiation is possible.
3. Generally online premium is lower as 3. Suitable for those who are not tech savvy.
insures saves on agent commission. 4. Beneficiary or nominee should be
4. Convenient to buy. Available anywhere, comfortable with online processes to
anytime. submit claim.
5. Difficulties in reaching remote call centre
for claim or enquiries.
6. Agent are generally easily approachable
Hybrid or combination of online and offline and offer personalised services.
models are also available now.
Some Important Insurance Schemes
Saral Jeevan Bima
1. It’s a standardised Term Life Insurance
Policy and offered mandatorily by all life
insurance companies.
2. Terms and Conditions of the policy are same
across all insurance companies.
3. Sum insured – Minimum - ₹5 Lakh,
Maximum - ₹25 Lakh in the multiple of
₹50,000.
4. Insurance company can offer sum insurance
more than ₹25 Lakh also.
5. Accident Benefit rider and Permanent
Disability Benefit rider can be added.
Some Important Insurance Schemes
Saral Jeevan Bima
6. Each company can decide the premium
independently.
7. Policy can be purchased by anyone
between 18 – 65 years of age.
8. Policy term may be between 5 – 40 years.
Maturity age is 70 years.
9. Compulsory waiting period of 45 days after
date of commencement of risk.
Some Important Insurance Schemes
Arogya Sanjeevani Policy
1. It’s a standardised Health Insurance Policy and
offered mandatorily by all insurance companies
offering health insurance.
2. Terms and Conditions of the policy are same
across all insurance companies.
3. Sum insured can be decided by each company
independently in the multiple of ₹50,000.
4. Each company can decide the premium
independently.
Some Important Insurance Schemes
Arogya Sanjeevani Policy
5. This Policy mandatorily covers most common
diseases including COVID – 19 and treatments
including Ayush treatment.
6. Policy can be purchased by anyone between 18
– 65 years of age.
7. Policy term is one year but can be renewed
every year till required.
8. Policy can cover spouse, parents, parents in laws
and dependent children.
Some Important Insurance Schemes
Pradhan Mantri Jeevan Jyoti Bima Yojana
1. It is a one-year term life insurance scheme.
2. Can be renewed each year, till 55 years age.
3. Eligibility – Any individual who is 18 to 50 years having a bank account.
4. This is Aadhaar linked policy, so can be purchased through anyone bank account only.
5. Fixed premium - ₹330 per year. It is auto-debited from bank account.
6. Premium payment period – May 25 – May 31, every year
7. Policy Period – June 1 to May 31, every year.
8. Sum assured - ₹2 Lakh
9. Contact your bank if you want to buy this insurance policy.
Some Important Insurance Schemes
Pradhan Mantri Suraksha Bima Yojna
1. It is a one-year Accidental Death and Disability Insurance cover.
2. It can be renewed yearly.
3. All individual bank account holders (single or joint both) in the age group 18-70 years
are eligible.
4. Fixed premium amount - ₹12 per annum per member.
5. Premium amount is auto-debited from the bank account of the holder.
6. Premium payment period – before May 31, every year.
7. Policy Period – June 1 to May 31, every year.
8. Sum Assured - ₹2 Lakh for accidental death and permanent disability and ₹1 Lakh for
permanent partial disability.
9. Contact your bank if you want to buy this insurance policy.
What Is An Insurance Repository?
1. Insurance Repository is an entity licensed by IRDAI
which enables holding of insurance policies in an
electronic form.
2. It maintains policy data on behalf of insurance
companies.
3. It also act as a single point of service for all e-policies
held by a policyholder.
4. It facilitates conversion of the existing paper policies
into electronic policies.
5. NDML, a 100% subsidiary company of NSDL is one
Insurance Repository.
6. You can view details of your insurance policies kept in
e-Insurance account opened with NDML in your
Consolidated Account Statement.
7. e-Insurance account can be opened online, any time.
What You Must Do Before Buying An Insurance?
1. Insurance is a subject matter of solicitation. Technically, it means insurance is
purchased, not sold. So its your responsibility to understand the product before you
price for it.
2. Satisfy yourself that agent you are dealing with is licensed by the insurance company.
3. Make payment to insurance company only, not to its employee or agent.
4. Ask for and understand Product Suitability Matrix and Benefit Illustration Document
before you decide you buy any insurance product.
5. Insurance is a long term contract based on good faith. Fill-up the proposal form
correctly.
6. Disclose existing diseases and existing policies, if any truthfully. In case of any
misstatement, claim can be rejected.
Remember
1. Insurance is not same as investment. It should not be purchased only for tax benefit.
2. If used as investment tool, it may prove costly in comparison to stand alone
investment options.
3. Understand the claim process before you buy any policy. Remember your beneficiary
should also be comfortable with claim process.
4. Understand the complaint process before you buy any policy.
5. Remember to update Beneficiary or Nominee in your insurance policy, if need arises.
Remember
6. Keep the beneficiary or your family members informed about your insurance policy.
7. Always add the nominee for the policy. Review periodically whether you want to
change nominee for your policy.
8. Remember to pay premium on time. Sending Premium Due notice or Renewal Notice
is not a statutory responsibility of the Insurance Company.
What To Do In Case of A Problem or Complaint?
1. Every Insurance company is required to provide contact
information for any query or problem or complaint.
2. These details can be found in the policy documents and
on the website of the company.
3. Information about escalation matrix and nodal officer for
complaints is also provided.
4. If your complaint is not redressed to your satisfaction,
you may approach Insurance Ombudsman.
5. Complaints can be lodged in Integrated Grievance
Management System available at
https://www.policyholder.gov.in/ portal of IRDAI also.
References
1. https://www.policyholder.gov.in/
2. https://www.irdai.gov.in/
3. IRDAI Toll Free Number for complaints - 155255 (or) 1800 4254 732
4. email - complaints@irdai.gov.in
Insurance Ombudsman
1. This is available to all individual policyholders.
2. You can approach Ombudsman only if you had
approached your insurance company earlier with the
complaint and it was rejected or not resolved within
30 days or not resolved up to your satisfaction.
3. The value of the claim including expenses should not
be above ₹30 Lakh.
4. Complaint should be made to Ombudsman office
having jurisdiction over your area.
5. More information available at
https://www.policyholder.gov.in/.
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