This will take the number of stocks in which institutions can only trade in the demat form to 30. The list will be expanded to 50 by August 15, SEBI chairman DR Mehta told The Financial Express. Institutions will be allowed to buy in the physical form, provided they dematerialise their holdings immediately and sell only in the demat mode. The securities which have been shortlisted are Telco, BSES, ACC, HPCL, Tata Chemicals, Gujarat Ambuja, HLL, M&M, Infosys, Great Eastern Shipping, HDFC, HDFC Bank, Hindalco, BPCL, Arvind Mills, Dr Reddy's Laboratories, Indian Hotels, Grasim, VSNL, Castrol, Crisil and Ranbaxy.

The eight stocks earmarked earlier for compulsory dematerialisation are SBI, Tisco, Reliance, L&T, Bank of India, IDBI, ICICI and IPCL. According to NSDL managing directorCB Bhave, the number of shares owned by institutions in these 22 securities will be about 100 crore. This amount is about the number they owned in the eight securities. "We expect at least 70 crore of these shares to be dematerialised. More importantly, the harmonisation of the two segments, physical and demat, from April 6 onwards, coupled with the expansion of the list, should leave no room for institutions to feel that they should not dematerialise their holdings in other securities as well. The move will give a great boost to the growth of the depository," said Bhave.

The working group noted that according to NSDL, 176 scrips are now eligible for dematerialisation. The institutional holding in these stocks is 479.32 crore shares of which 33.6 per cent have already been dematerialised. NSDL had put up a list of 20 companies to SEBI but the market regulator decided to add another two companies to the list. Others who attended the meeting were representatives of NSE, BSE, SHCIL, Amfi, HongkongBank,Citibank, Morgan Stanley and Merrill Lynch. Speaking to The Financial Express, SEBI executive director Pratip Kar said: "The cost of dematerialisation has to be brought down, which can enable the demat business look more attractive for the depository participants and attract more investors".

The working group, in its promotional work, has decided to call for a meeting of registrars to enable them to speed up their job of dematerialing the 22 stocks.

A meeting is also planned with clearing banks of stock exchanges to examine whether offline depository services could be provided by them at the exchange level. SEBI has already initiated talks with the Department of Telecommunications for the same.