NSDL starts instant SMS to check fraud

Written by Bijith R | Mumbai | Updated: Jan 30 2011, 04:26am hrs
In a bid to check misuse of investors account by stock brokers, the National Securities Depository (NSDL) has started providing instant SMS alerts to investors for any debit or credit transactions in their account.

Three years back, the depository had started providing such SMS facility, though on a random basis. Later, it was extended to all investors who had registered their mobile numbers with them. However, on registering, the SMS wasn't sent on an instant basis but only the next working day.

But since the last three months, the free SMS facility is being done on an instantaneous basis helping investor check on frauds by enabling them to track any un-authorized trade on a realtime basis and take suitable remedial actions.

In order to prevent on such misuse, the capital market regulator Securities and Exchange Board of India (Sebi) last year had streamlined the provisions for the execution of Power of Attorney (PoA) by the client in favour of the stock broker and depository participant.

According to it, the use of PoA should be limited to only market trade and not for transfer of securities for off-market transactions. Further such PoA executed should contain list of clients and brokers bank accounts and demat accounts in which funds and securities can be moved.

With the start of the SMS facility, Gagan Rai, MD & CEO, NSDL said,The number of investor complaints on account of unauthorised trade has fallen drastically and forms a very negligible part of the overall investor grievances. Rai added, Major portion of investor complaints now pertains to registrar and share transfer agents with regard to delay in demat of share certificates.

The depository started SMS alert facility three years back, but was done for only debit transactions from a clients account. In 2010 NSDL extended the facility to all credit transactions as well. At present the depository's SMS alert facility covers all debit and credit transactions in a clients account, change in investor address and invocation of pledge besides purchase and sales of mutual fund units.