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Vivek Law
MUMBAI, DEC 7: The National Securities Depository Ltd (NSDL) chief CB Bhave has asserted that the entire settlement in the Indian capital markets will be in paperless form by the end of 1999. This sense of optimism stems from the recent push which the government has decided to accord to the depository process. The shape of things to come appeared in the form of Securities and Exchange Board of India (SEBI) bringing in all nifty and sensex stocks within the mandatory demat trading mode from April 5, 1999, at a meeting last week.
Incidentally, SEBI chairman DR Mehta, who has been more conservative in his predictions when it comes to depository, has maintained that it would take another two years for the market to move to purely demat mode of settlement. Bhave, however, is enthused by the manner in which the list of mandatory demat for all investors is being expanded in much the same manner as that of the list for institutions being asked to trade only in demat form.
This list will rise from 8 to 300 by theend of 1998, and the mandatory demat trading list has already jumped from 10 in January to 60 by April this year. ``If by the end of the year, we have 300 plus companies on the list, which seems realistic, we would have covered the entire settlement system in the market and there would be no paper in the settlement system of the Indian markets in the new millenium,'' says Bhave.
Bhave says that the depository participants are well faced to handle the pressure of demat requests in the days ahead of January 4, when 12 scrips move to a mandatory demat trading mode, adding that DPs and registrars, who have together dematerialised huge chunks of shares lodged by institutions for dematerialisation, are not going to be pressurised by the rush from retail investors. There are fears that with a large number of investors rushing to depository ahead of mandatory demat trading, it could lead to depository participants choking up.
``The real pressure had come from mutual funds and FIIs when they came in just ahead oftheir deadline. Now DPs are better prepared and see every share dematerialised as a business prospect. On the other hand, registrars are much less stressed now as their workload has come down to one-tenth of what it was till institutions came and dematerialised their holdings. Registrars have told us that they are well prepared to take care of small orders which are going to come in now after having taken care of the big investors with ease,'' says Bhave.
``In most of these 12 securities, we are already seen demat settlement of 99 per cent in successive weeks and hence there is not going to be much change on this front. The great change that will take place, will be the fact that an investor will now be able to buy demat shares as well, something he has been deprived of till now,'' Bhave adds.
``The number of active traders in this country is no where near to the figures that keep appearing in the media from time to time. My estimate is that the number is just about 2-3 lakh and we have covered more thanhalf of them. Even passive investors are flocking to the depository as they get rid of accounting hassles, get the ability to change combinations and access to easy loan against shares,'' he says.
Interestingly, Bhave says that the fact that depository has already reached more than 1,500 towns shows how grossly the administrators have underestimated the level of dissatisfaction and grievance of investors in towns and villages to the exisiting stock market infrastructure.
``We all expected the depository to pick up in the big cities first and then spread to other centres but the reverse has happened. This is a tribute to the small investors across the country who despite having been ignored by all have held on their faith in the system and the depository,'' says Bhave.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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