The Hindu Business Line : `Know your client'

This refers to the article `NSDL to probe into Karvy-DP records for IPO abuse' (Business Line, December 17): NSDL's decision should make SEBI bring the entire IPO allotment process under vigilant surveillance.

The process of receiving applications and bidding should be different for retail and non-retail investors. The 35 per cent quota for retail investors has a better chance for manipulations by opening innumerable accounts with various DPs or different branches of the same DP.

The unique identification number allotment process should be expedited. Before that, the process of allotment of the numbers starting from the application form should be simplified and it should cover collection and dissemination of only the most essential details rather than going after unwanted data, which may dilute the entire process.

In the wake of disclosures, commercial banks should take enough check measures to screen the multiple accounts by a single depositor in various branches. RBI and the IBA should bring suitable steps for checking this effectively. As pointed out, the allotment process faces time constraints and it is very much possible that the DPs may be under heavy pressure, resulting in dilution of diligence exercise.

The rush of new account holders during the IPO season makes the situation worse. As noted, this exploitation of such loopholes might have been common in the past IPOs as well. While conducting a post-mortem exercise, the regulator should look forward for effective insulator measures for future IPOs.

C. P. Velayudhan Nair

Kochi

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