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Jayshree Bose
Mumbai, Feb 3: The Bombay Stock Exchange (BSE), the chief sponsor of the Central Depository Services Limited (CDSL) which holds 65 per cent of the depository's Rs 100 crore equity, proposes to bring down its stake in the latter to around 30 per cent. Standard Chartered Bank and Global Trust Bank are likely to pick up 7.5 per cent each from BSE.
The endeavour is likely to yield twin benefits for BSE: one, it would project CDSL as a professional organisation with institutional sponsors and two, it would reduce a financial burden which has devolved on BSE through its contribution of Rs 65 crore to CDSL's equity.
According to sources, negotiations with Stanchart and Global Trust Bank are at an advanced stage. The original promoters are also in various stages of discussion with other potential sponsors who would be interested in picking up the remaining 20 per cent earmarked for divestment. Talks are reported to be on mainly with banks, which have to obtain permission from the Reserve Bank of India (RBI)before accepting sponsorship.
Once the divestment takes place, the holdings of the original sponsors would be: BSE (around 30 per cent), Bank of Baroda (10 per cent), State Bank of India (10 per cent), Bank of India (10 per cent) and HDFC Bank (5 per cent). The Depository Act requires the original sponsors to maintain a 51 per cent holding jointly,. Hence, it still leaves scope for further divestment at a later stage. CDSL, which obtained its registration certificate from Sebi in October 1998, is expecting its letter of commencement replete with its mandatory conditions, shortly.
The lowering of BSE's stake would go down well with Sebi, which would be concerned about protecting any institution from undue clout exercised by its sponsors and their representative directors.
The endeavour seems to be towards imparting a professional and institutional character to the depository by inducting a larger number of bank sponsors, each of which will have a representing director on the board. National SecuritiesDepository Limited (NSDL), promoted by the National Stock Exchange, has institutional promoters such as UTI, IDBI and the State Bank of India.
At present, the 12-member board of directors of CDSL comprises five directors from the BSE. The new non-BSE directors who have been inducted on the board are: SA Dave (ex-chairman of Unit Trust of India), Cyril Shroff (solicitor, Amarchand Mangaldas), S Gopalakrishnan (ED, BOI) and K C Chakraborty (DGM, BOB), while the SBI nominee director is yet to be appointed. With P V Maiya, managing director of CDSL, that leaves one more slot to be filled up at present.
Apart from the professional angle, the aspect of sheer financial relief is crucial, given the fact that the BSE experienced a massive 95 per cent dip in its profits during 1997-98. This was on account of the transfer of Rs 60 crore to the trade guarantee fund (which was a pre-requisite to the expansion of its on line trading system), and a Rs 8 crore equity contribution to CDSL in May 1997.
CDSL has receivedover 50 applications from depository participants, some of which are at various stages of inhouse processing, with almost half of these ready for submission to Sebi for approval. Most DPs are likely to be affiliated to both depositories to make best use of the investments in terms of technology.
CDSL has also announced that its custody charges would be nil. As volumes grow, NSDL has been lowering its custody charges, which were recently pegged at one basis point as against two earlier. As part of its other preparations, the BSE depository has also made around 175 presentations to companies and DPs for affiliation after it receives its letter of commencement.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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