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Knowing what is equity is of paramount importance before you start on your investment journey across stock exchanges in India. A company requires funds for its businesses and to meet its working capital requirements. To receive funds, it can resort to both debt and equity instruments. It can provide its shares or stocks through Initial Public Offerings (IPOs) to investors as part of raising funds through equities, or offer loan instruments with fixed interest rates, known as debentures.

Once a listed company offers its stocks to investors, these can be then traded – purchased and sold – in stock exchanges, like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

The term depository refers to a facility in which something is deposited for storage or safeguarding or an institution that accepts currency deposits from customers such as a bank or a savings association. A depository can be an organization, bank, or institution that holds securities and assists in the trading of securities. A depository provides security and liquidity in the market, uses money deposited for safekeeping to lend to others, invests in other securities, and offers a funds transfer system. A depository must return the deposit in the same condition upon request.

As mentioned above, depositories are buildings, offices, and warehouses that allow consumers and businesses to deposit money, securities, and other valuable assets for safekeeping. Depositories may include banks, safehouses, vaults, financial institutions, and other organizations.