'Multiple Depositories Will Lead To Scams'

He also termed the fees prescribed for the membership of the depository as very steep and said that the government should in an attempt to popularise the system subsidise it. Regretting that the measures taken by the government had weaned away the small investors from the capital market he said there was need to bring them back into the fold by reducing the minimum equity investment to Rs 1,000 from Rs 5,000.

He said following the decision the investing population had drastically come down to seven million during 1995-96 as against 80 million in 1993-94 and 50 million in 1994-95. Referring to the presence of more than 200,000 sub brokers with not more than 1,000 registered with the various stock exchanges, Mayya said there was need for the Securities and Exchanges Board of India (Sebi) to come out with an immediate solution. He said these brokers together account for 90 per cent of the operations as they act as a nexus between the client and share brokers.

 

He said the decontrol of the capital market had led to a free-for-all situation in the capital market despite the presence of Sebi.

There was need for a safety net especially for fixing the price of an equity issue. Stating pricing of some of the issues had been very unscientific and this had been amply demonstrated in the erosion of the offer price of the equities in hundreds of companies.

The market depreciation alone accounted for more than Rs 150,000 crore with scrips of more than 3,000 companies quoted at below par price among whom the scrips of 2,000 companies was being quoted just 50 per cent of the issue price. Similarly, he also stressed the need for a mechanism to deal the odd lot shares which account for nearly a quarter of the total equity base of the country.

Mayya stressed the need for a third grid of securities trading and welcomed the move of the bourses in the country to set up a national stock exchange. He expressed hope that the next meeting of the bourses scheduled to be held in Coimbatore towards the end of this month could clinch the issue.

He said the market players need not be despondent following the slump in the stock market. With the government going in for a disinvestment policy a number of good public sector units would be involved and this could help the market to revive.