Nsdl In Talks With Banks To Push Demat Stocks

Bhave told Business Standard: "We have initiated discussions with some banks on the subject. Dematerialised stocks will be gradually the preferred option for banks."

He said soon dematerialised shares would increasingly be pledged by the banks, who would find it a safer option since the problems associated with physical stocks would no longer be there.

Bhave, who earlier addressed a seminar on capital markets hosted by the Bengal National Chamber of Commerce and Industry (BNCCI) said the setting up of the depository will substantially lower the cost of transaction for the brokers.

According to Bhave, more and more primary issues will join NSDL with the changing time. Even leading financial institutions are becoming aware of the need to join NSDL to save on postal cost and problems dealing with investor complaints day after day. Nearly 20 per cent of the new shares issued by ICICI after its merger with SCICI was issued as dematerialised shares to save the hassles of paper-based trading, postal costs and investor grievances.

 

Dematerialised stocks currently attract a premia of 0.5 per cent to 1.5 per cent because of clean settlements. "But the cost of transaction will be lower in the near future," said Bhave.

About 66 companies, representing 25 per cent of the market capitalisation, have already joined NSDL. Out this, 47 companies have established connectivity with NSDL, either themselves or through their registrars. "We expect to have nearly 100 participants by end-1997," he added.

It is believed that there are 18-19 crore dematerialised shares with a market value of Rs 2600 crore. "Foreign institutional investors and mutual funds have also evinced interest to join the depository," the managing director added.

About 8,50,000 shares from retail investors have already come into the depository.

The National Securities Depository Ltd, established in November 1996, is sponsored by the Industrial Development Bank of India, Unit Trust of India and the National Stock Exchange.

Spread across Mumbai, New Delhi, Calcutta, Chennai, Pune, Coimbatore and Cochin, the depository is expected to provide greater security and increased transparency in transactions.