Direct demat process needs streamlining
Vivek Law
Applicants to the ICICI Bank public issue who had given up on receiving their shares in demat form, received a pleasant surprise when the registrar to the issue approached them individually and agreed to demat the physical shares for them free of cost.According to MCS, the share registrar, about 10 of the 130 shareholders who were found to be eligible for receiving the bank's shares in electronic form, were not credited with electronic shares due to an error on the part of the registrar. Interestingly, three of these, were employees of the National Securities Depository Ltd (NSDL)! The error crept in at the time of checking for the stringent eligibility criteria for receipt of such shares. "We received a total of 400 eligible applications for receipt of shares in the electronic form. Out of which about 130 applicants were eligible for allotment considering that the issue was oversubscribed six times", said a senior MCS official. "We issued the shares to 120 applicants but due to an error we ended up
sending the remaining ten applicants physical shares. But once they responded to us we have individually approached them and got their physical shares dematerialised for them on behalf of ICICI, free of any demat charge", said the official. Market sources however say that the number of those who did not get their shares in electronic form could be higher. A total of 5.50 lakh shares were allotted directly in the demat form. The incident has sparked off a debate among market players to further streamline the process of issue of shares directly in the demat form. The incident has sparked off a debate among market players to further streamline the process of issue of shares directly in the demat form. "This is a new process and there are bound to be certain stray cases of error. In fact, about 3000 applications had to be rejected because the person gave his bank account rather than demat account or his name and address did not match the one listed with his depository participant", said a source."Currently
all the applications come to the registrar. He then goes through each of them and sorts out those which are for direct credit in electronic form. After this, these applications are sent to NSDL for verification. We should have a system where the investor directly goes to his depository participant with his request. The DP can then electronically download these requests after verification, to the NSDL, which in turn can send them electronically to the registrar. We learn that NSDL is considering such a system", said the source. NSDL sources confirmed that they were looking at various options and a primary market module which would involve issuing shares totally in complete electronic form is being developed.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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