Investors Prefer Optional Demat: Cerc

The Consumer Education Research Centre (CERC) in its survey has found that investors want dematerialisation as optional (especially for below par value shares) as small investors find the charges very high.

At times, the cost of shares is less than the total cost of dematerialisation. Compulsory demat should be abolished and transaction should be allowed for physical sale or purchase in case of small investors.

According to the findings, the cost of dematerialisation should be borne by companies. If not entirely, at least share the cost partly. Courier charges in case of demat accounts in respect of single family should not be charged separately to each account holder. DPs charge Rs 3 per certificate for dematerialisation even in the cases pertaining to transfer-cum-demat.

The findings also state that DPs do not take any responsibility in case of delay in any procedure by company / registrar. In case when there is a delay in confirming demat requests losses, if any, it should be borne by the Company / SHR / Depository.

In case dematerialisation of shares takes more than the stipulated one month time and some Stringent guidelines should be stipulated in order to compensate the person who has suffered losses. The compensation may be provided by the company or DPs or Depository.

Shareholders may be given at least a three months notice before demat is made compulsory. SEBI should prepare a standard list for the reasons why there are rejections and the same should be shown on the rejection slip.

All the charges should be brought down by 25% & account maintenance charges should be abolished. Incentive scheme for membership should be started. A regulatory body should be formed, who may in turn formulate minimum charge structure.

DPs should accept cheques instead of emphasizing on cash payments. Sale and purchase charges should be reduced for small investors. Opening & closing charges should be abolished. Requirement of minimum balance, should be removed and the compulsory maintenance of S/B a/c should also be removed.

The agreement between the DP and the client states that all disputes should be subject to the jurisdiction of Mumbai only. As per the Consumer Protection Act, 1986, case can be filed in the courts with local limits. Agreement should be amended, the findings state. If DPs do not abide by rule, they should be punished and facility of signature by either or survivor should be provided in case of joint holdings, as it is provided in bank accounts.

Periodic meetings and seminars should be held so as to educate the account holders. Regular seminars may be held and information booklet may be supplied to all the account holders for information on every modification guidelines. A/c opening and closing procedures should be simplified. Demat A/c may be opened on the basis of the Bank A/c or on providing some certificate, instead of asking for further identity proof.

All the procedures of opening a demat account and the demat request for shares may be completed in a single day. Transaction statements should be simple & understandable.

Just like the banks, only one account should be opened for joint share holders even if there is a difference in the name of their spellings.

When One account holder (single) is having a demat a/c then if he holds shares jointly with somebody then the shares may be deposited in the single a/c instead of opening another joint a/c especially when this is the only share. Every client should have easy access to the Regulatory Body, the findings state.