DoT has agreed to relax the norms under condition that a certain fee is paid to it which will be worked out according to the extent to which data is relayed between the two networks. The current DoT norms do not allow wide-area-networks to connect. This means that a branch office of a depository participant cannot connect with the depository directly leading to cumbersome procedures and delays in processing investor requests.

It is learnt that the Securities and Exchange Board of India (Sebi) has expressed concerns over the move by DoT to levy a fee as it is felt that such a fee might well render the connectivity unattractive to the depository participants.

Sebi is of the view that the depository is not a commercial entity and will be the cornerstone of the progress of the capitalmarkets and hence all technological assistance needs to be provided to it for its growth.Government sources pointed out that Sebi has already taken up the matter with the finance ministry. Sources in the ministry said that the finance minister may himself take up the matter with DoT.

It is learnt that the finance minister is extremely bullish on the depository and this view has been conveyed to the highest levels of the government.

It is for this reason that there was a special mention of the depository in the prime minister's statement on Saturday outlining his plans for boosting the capital market and improving investor sentiment.

According to the prime minister's statement, necessary structural changes would be brought about to ensure future growth of the depository as this is one way of bringing in greater transparency and lower cost to investors.

"Allowing the network of a depository participant to connect to that of the depository is one of the most critical structural changes that is requiredfor the growth of the depository. The government is aware of this and we hope to be able to get the DoT to agree to make a relaxation for the depository", said a top government source.

During his recent visit to Sebi, the finance minister was briefed about the progress made by the depository. It was also brought to his notice that the Dhanuka panel has suggested that a change should be brought in the Depositories Act making demat trading mandatory. Currently, the Sebi is implementing this rule not through the statute but through the listing agreement at stock exchanges.

"When a country like Sri Lanka can have only demat trading why cannot a far more vibrant market like India go for this? This would be the ultimate structural change relating to the capital market that the government could bring about", said a source closely associated with the growth of the depository.