Cbdt Set To Clear Bse Depository
The Central Board of Direct Taxes (CBDT) is expected to clear the Bombay Stock Exchange (BSE) proposal to set up a depository. According to BSE sources, the government has been convinced by the bourse's top brass that the depository is a `utility service', and not a commercial venture.
BSE sources said the CBDT also has been convinced on the matter and the issue is now pending with the finance ministry. "There has to be a meeting of the finance ministry officials with CBDT. The reshuffle in the portfolio of key government officials is expected to further delay the clearance," the BSE source said.
BSE had earlier announced the proposed shareholding pattern of the depository in which the exchange and brokers would bring in Rs 30 crore. The Unit Trust of India, banks and financial institutions would bring in Rs 60 crore while the Calcutta Stock Exchange and the Delhi Stock Exchange will bring in Rs 5 crore each.
"We are confident that, even if outside entities fail to bring in funds, we will invest on our own and mobilise Rs 100 crore required for the net worth," a governing board official said.
A team of senior BSE officials including executive director R C Mathur and government board member Anand Rathi was in Delhi on Monday for the purpose. Members of the standing committee on finance who visited BSE were also appraised of the situation. BSE sources said they agreed to take up the matter with CBDT.
BSE was earlier told by CBDT that it cannot invest in commercial ventures as it is not a company but an association of persons, which is a tax exempt entity. While, under the Depository Act, stock exchanges are allowed to set up a depository, I-T rules say that an association of persons cannot invest in commercial ventures.
This has necessitated an amendment in the I-T Act 1961 to make such a provision for stock exchanges.
However, BSE sources admitted that the amendment would have further delayed the process of setting up a depository. "We ice for the user and by the user can make profits. However, the government is convinced that it is not going to make money in view of the huge capital investment that the exchange would have to make," the source said.
BSE is expected to get a formal clearance from the Securities and Exchange Board of India. BSE officials said a clearance from the Department of Telecommunications was also necessary for the depository.