Speaking at a conference on "Millennial changes for the Indian Capital Markets" organised by the Indian Chamber of Commerce, Bhave said the settlement mechanism for 55-65 per cent of demat deliveries on an average had become more efficient and was encouraging investors to convert their GDRs into electronic shareholdings.

He said it was now time to debate whether there was any need to go for GDR issues when all potential investors were available here and willing to invest as the risk of bad paper from the secondary markets had been largely eliminated.

Bhave said he expected more retail investors to opt for demat holdings in the next 18 months. At the moment, NSDL has over 12 lakh accountsof individuals, which are mostly from the south and western parts of the country.

Highlighting the NSDL agenda for the next 18 months, Bhave said one leg of the settlement had been largely secured with demat of all major large and mid-cap stocks but the payments system still remained a major constraint as funds transfers by banks took a lot of time. He hoped the problem would ease when RBI implemented its national payments system.

He said some banks had started offering "Anywhere Banking" for the benefit of their stock market clients. This would facilitate transfer of funds from different regions for the purpose of funds pay-in to the stock exchange clearing houses.

Demat had also made pledge of shares with banks more convenient and the value of advances against pledge of demat shares had gone up to Rs 5,700 crore, reaching levels which the market had never seen before. "Banks who do not offer such services will be left behind," Bhave commented.

In the near future, NSDL also proposes to reduce therequirement of paper for depository participants (DPs) and their clients. In due course, Bhave predicted DPs would give investors the option of getting their transaction statements on the net. Besides, the `Debit Slip' issued by clients to their DPs for transferring shares to another account holder would also be eliminated once such authorisations are possible on the Internet.

NSE's deputy managing director Ravi Narain said technological changes and a strict margining system and limits on individual exposures had enabled risk containment. Settlement cycles had been reduced to T+5 and counterparty risk had been virtually eliminated.

Market risks, however remained and this could be addressed with a suitable hedging instrument like index futures which NSE wanted to launch soon with the permission of Sebi. He stressed the need for upgradation of the back/front offices of the brokers to give them the cutting edge in a competitive environment.

SS Nayak, chief general manager of UTI said the mutual fundsindustry had not only mobilised record amounts in the current year but was geared to fulfil expectations of investors both in terms of servicing and mature handling of their investments.

He said in the first four months of 1999-2000, the industry had mobilised Rs 12,000 crore and Rs 3400 crore in August alone. In comparison, mobilisation by the industry last year was Rs 21,000 crore. At this rate, he felt the industry would end the year with collections close to Rs 40,000 crore.

Making a presentation on global capital flows in the post-WTO regime, HV Lodha of Lodha Capital Markets said nearly 95 per cent of the country's investment funds came from internal resources. "Low exposure to external trade reduces the risk of foreign exchange volatility," he added.

Earlier in his welcome address, president KK Bangur said: "It is also becoming increasingly clear that structural changes in the capital market system must be accompanied by a system of fiscal incentives which would channelise resources into themarket."