SEBI executive director in charge of depositories Pratip Kar said that the regulator has received representations from banks and would grant them a personal hearing shortly. He said that while some banks had directly approached SEBI, others had routed their grievance through NSDL.

"The decision was taken by SEBI at the working group on depositories, which includes depository participants, stock exchanges and depository representatives. Once the decision was taken by the group, we issued letters to each bank DP to refrain from levying an additional burden on investors," saidKar.

SEBI is of the view that investors are rushing to banks to open depository accounts due to the regulator mandating trading in demat shares. "There are not many broker DPs yet. Hence, small investors are dependant on the network of banks to open accounts. It is SEBI's duty to ensure that investors do not end up facing an additional financial burden," said Kar.

SEBI has, in its letter to bank DPs, asked them not to insist on investors opening bank accounts or maintaining a minimum balance as a precondition for opening accounts, as this would be against the interest of investors and would discourage them from opening depository accounts.

Meanwhile, the parallel view in the market is that it should be allowed to decide the charges and banks should be allowed to work out innovative business strategies.

"After all, for us, it is a business. We have invested money in setting up systems. Depository business is definitely going to supplement our cash operations. Why should we be restricted fromundertaking initiatives to boost business? If our package is not attractive, the market will dump us and go to the remaining 40-and-odd banks which have started DP operations. Let the market decide. Investors are thronging the market and SEBI should not involve itself with deciding what is the minimum cost an investor should incur," said an official at a banking DP.

Banks had all along been hesitant to come into the depository business, but have recently found value in it and are going the whole hog in enrolling new clients. Interestingly, most banks are not content with just targeting their cash account holders, but are looking at enrolling fresh clients and not merely offering another option to their existing clients.

In the long run, however, the two functions -- cash and shares -- would complement each other. Currently, more than six lakh investor accounts have been opened with NSDL and these investors have dematerialised Rs 1,30,000 crore worth of shares.