Question
How the depository system is parallel to the banking system?
Solution
The depository system is parallel to the banking system. A bank holds cash in accounts whereas a depository holds shares in accounts for its clients. A bank transfers cash between accounts whereas a depository transfers shares between accounts. In both the systems, the transfer of cash and shares takes place without the physical handling of cash or shares. Similarly, both the banks and the depositories are accountable for the safe custody of cash and shares respectively.
