Q.What is an ISIN? Explain its significance in the depository system.

Every security handled electronically needs its own unmistakable identity code, just as every bank account needs a unique account number.

Meaning. The International Securities Identification Number (ISIN) is a unique 12-character alphanumeric code allotted to a particular security — for instance, a specific company's equity shares, or a specific series of debentures — by the depository, when that security is admitted into the depository system.

Significance.

1. Unambiguous identification. With thousands of companies and security types traded electronically, the ISIN gives each one a single, unmistakable identity, avoiding the confusion that could arise from similar company names or share classes.
2. Accurate processing of transactions. Every dematerialisation, trade, settlement instruction and corporate-action credit is carried out against the ISIN, ensuring the depository, the DPs, the stock exchanges and the clearing corporation are always acting on the exact same security.
3. Standardisation. Because the ISIN format is internationally standardised, it also allows Indian securities to be identified consistently even in cross-border or international contexts.
4. Support for corporate actions. When a company undertakes a bonus issue, rights issue or stock split, a fresh or linked ISIN allotment helps the depository correctly track and credit the resulting securities to Beneficial Owners. …

Confusing the ISIN (which identifies a security) with a demat account number (which identifies an investor's account) — the two se …