The commencement certificate is something on the lines of a banking licence that is granted by the Reserve Bank of India to applicants wishing to promote banks.

Although in-house sources refused to commit themselves to a date, they stated that the depository was moving fast not just on systems and training, but was already making presentations to stock exchanges, depository participants and issuers. The CDSL will be the second depository to set up shop to facilitate dematerialisation, the first being the National Securities Depository Ltd (NSDL), promoted by the National Stock Exchange.

The fact that the CDSL had taken a major stepforward became evident with the appointment of P V Maiya as managing director of the depository in September, 1998. Maiya was CMD of ICICI Bank till he retired in June, 1998. R Chandrasekaran, ex-MD of the Stockholding Corporation of India Ltd, is advisor to CDSL.

The depository, which was incorporated in December 1997, with a start up capital base of Rs 100 crore, has the Bombay Stock Exchange as co-promoter. The total number of promoters is expected to range between seven and eight, among whom three are three or four banks. The banks -- State Bank of India, Bank of India, Bank of Baroda and HDFC Bank -- have applied to the RBI for clearance. The Depository Act stipulates that 51 per cent of the equity should be held jointly by the promoters.

Sources state that the project could have been flagged off earlier had it not been for some delay in getting an income tax exemption certificate from the Central Board of Direct Taxes (CBDT). Rule 17 (C) of the Income Tax Act requires a clearance certificate to beobtained from the CBDT stating that BSE, as a trust, was eligible for income-tax exemption, since its equity contribution was in the nature of an approved investment.