The board has also been expanded from 12 to 20 to make room for fresh inductions as and when the Bombay Stock Exchange (BSE) divests its stake to other depository participants. This, according to BSE officials, is an enabling provision to take care of the need to offer board representation to new stakeholders as and when the need arises.

At present, there are three bankers on the CDSL board. They are S Govindaraj (chief financial officer and deputy managing director of State Bank of India), S Gopalakrishnan (executive director of Bank of India) and KC Chakravarty (deputy general manger of Bank of Baroda). HDFC Bank, the fourth promoter bank, has not yet nominated a director to the board. While BoI, SBI and BoB each own 10 per cent in the Rs100-crore capital of CDSL, HDFC has a 5 per cent stake. The promoter banks were concerned that in the event of the board deciding to expand, banks could find themselves woefully short of adequate representation and brokers dominating the show.

"There was no guarantee that we would even continue to have one nominee each on the board. Since it was optional on the part of CDSL to have bank nominees on the board, we ran the risk of having our numbers cut down further. For this reason we brought up the issue before the board to have a permanent slot for each of the promoter banks. There were no reservations to our proposal and hence a crisis which could have erupted has been nipped in the bud," said a source at one of the promoter banks of CDSL.

Sebi has already made it mandatory on CDSL to ensure that brokers' nominees on the board should not exceed 40 per cent of its total strength. "This means that irrespective of the size to which the board is expanded brokers are not going to dominate it. So there is notso much of a concern as there would a number of professional directors on the board," said the source. P>CDSL was given the approval to commence operations by Sebi when it had just sacked the BSE president and issued show cause notices to its executive director RC Mathur. Hence, to ensure that there was transparency at the depository, Sebi directed that only 40 per cent of the board could comprise of BSE's broker nominees and the chairman of CDSL would be SA Dave, the former Sebi chairman.

The four banks hold 35 per cent in CDSL with the remaining stake being held by BSE.