These directives, in their opinion, encroached upon their banking operations, which fell within the purview of the Reserve Bank of India.

According to senior spokesmen overseeing the DP activities within banks, a directive was issued by Sebi forbidding bank DPs on making savings bank accounts or term deposits a pre-condition for allowing retail investors to open DP accounts with them. Bankers have objected to it on three counts.

One is that the directive gave no reference in terms of any legal provisions invoked by Sebi on the basis of which this missive was issued. Secondly, since the opening of accounts was part of their banking business,Sebi's directive would effectively mean dual control of the Sebi and the RBI over this aspect of their banking operations- and greater confusion in the bargain.

Third, bank DPs, with their larger network than non bank DPs, are more technology-driven- and with business volumes in this area yet to pick up, its only the additional comfort factor of deposits that makes it worthwhile for banks to take up the DP business.

More specifically, since a single bank official often ends up managing both the bank's core businesses and the DP activity, expenses on account of telephone calls, written communication etc, all of which add up to a tidy sum, do not get properly categorised- as a result of which DP account holders in a bank are not charged on these counts, unlike as in the case of a non-bank DP.

Another issue which bank depository participants are sore about is Sebi's insistence that as in the case of companies, banks coming out with public issues also deposit their float money with other banks. Iratebankers point out that unlike as in the case of companies, there is almost next-to-no possibility of banks refusing to refund application money in the event of non-allotment- if they did, it would be tantamount to bank failure, instances of which are very rare.