SHCIL has, meanwhile, revamped its back-office functions and is now insisting on share-transfer requests coming to it much ahead of the deadline, said depository sources.

The National Securities Depository Ltd (NSDL) recently submitted the report to Sebi. NSDL managing director CB Bhave was not available for comment. Sebi executive director, incharge of depositories, Pratip Kar confirmed the receipt of the report but did not elaborate.

Sources said the report, in which NSDL had been assisted by the software provider Tata Consultancy Services as well, has pointed out that instructions were received by thedepository participant well after the deadline and this led to clogging of the system.

As a result, requests of some investors could not be processed on time. This had led to SHCIL not being able to deliver shares to the clearing houses at the stock exchanges on time and this had threatened the settlement at bourses.

At that point of time it was widely speculated that the reason for the failure was a loss of connectivity with the depository owing to a technical snag.

This, however, does not seem to have been the case. "It was a back-office failure," said a source. It is not clear what stand Sebi would take on the issue.

It must be mentioned that soon after the crisis hit the market, Sebi and NSDL had laid down stringent deadlines for acceptance of transfer requests by investors.

SHCIL too, has since then, beefed up its back office and in fact has now started receiving requests from investors well in advance of the deadline, said NSDL sources.

"It is a new system and DPs are still learning to copewith the massive demand from investors. These are teething troubles but one must ensure that they do not recur and hurt the integrity of the markets," said the source.

The fact that there was no connectivity failure was also borne out of the fact that while SHCIL's machine which processes the institutional transactions continued to send out instruction details to the depository, the machine which handled the retail segment of the clients could not do so.

The connectivity between NSDL and SHCIL is one and both the machines are connected through this link. "The fact that one of the machines continued to send the instructions shows that the problem was not with the link between the depository and the DP," the source said.