Through all this, National Securities Depository Ltd (NSDL) chief CB Bhave has chosen to remain silent on the reasons for the delay. Bhave spoke to The Financial Express, outlining the reasons for the delay.

Q: Considering that you would be the most affected with a second depository becoming operational, there are charges of NSDL having delayed the connectivity. Is this the case?

A: We are aware of the propaganda by certain vested interests of putting the blame on us for the delay in connectivity. All we can say is that inter-connectivity by definition would have to be worked out between the two sides and this is being done.

Q: It has beenover three months since the second depository got the Sebi nod to commence operations. Why is it taking so long for connectivity to come through?

A: When you develop two systems whose architecture and logistics are not compatible - being based on different principles - building an interface between the two is always a difficult job. We were the first to build a depository system.

The second depository could build a system similar to ours or go in for a different system. They chose the latter and hence an interface has to be created which would take more effort than it would otherwise have. It is also important to ensure that when a system is being developed, all the principles on which the system would be developed are on the drawing board from the beginning itself. Any half-way changes could lead to further delays.

Q: Does this mean that during the development of the interface, there have been occasions when it has been found that the principles on which the system have been based have beenchanged frequently?

A: One would not wish to comment on this, but the system developers from both the sides are working overtime for the past three months to address the technology issues.

Q: So how long would it take to get the connectivity going?

A: It is very difficult to peg a specific date. But typically, a software development cycle for a system could take anything from three to nine months. This depends on the complexity of the system and more importantly, on how clearly the specifications are defined initially itself. We have been working on the connectivity for the past three months.

On certain aspects, like the transfer of shares from one depository to the other through the registrar, we have been working for quite sometime. So, while headway has been made on certain aspects, there are still some aspects which need to be addressed. We have to look at connectivity between the disaster sites of the two depositories as well.

Q: How about Y2K compliance of thisinterface?

A: Yes, it is absolutely imperative to get this software tested for Y2K readiness. But the process for this should not take more than a week.

Q: There is the issue of stamp duty on transfer of shares from one depository to another. What is being done to clarify this to investors?

A: The issue has been taken up with Sebi and the regulator is believed to have initiated a move to get a clarification on this issue.

Q: Investors who have dematerialised their shares with the second depository are angry over the delay. Is connectivity between the two depositories a must for them to trade in these shares?

A: Well, as long as they are trading within the CDSL settlement system, there is no need for connectivity. Connectivity will be needed only when a person who has his shares dematerialised with CDSL decides to sell his shares to a person who has his account with NSDL. Hence, account holders of CDSL can, at this point of time, settle shares between themselves.