The Hindu Business Line : Rationalisation of demat tariffs

One of the problems the retail investors face is the varying demat tariffs among various participants. There are considerable variations in annual maintenance charges and transaction charges. While a few of the participants offer zero custody charges, others charge sizeable amounts. And there are often hidden charges levied by the participants who offer virtual `free' services. As the majority of stocks are dematerialised, investors have no other option but to tolerate such irregularities.

The recent apex court ruling that SEBI has the right to rationalise the charges levied by the depositories may bring some relief to the investors. No doubt, the investors should be ready to spare nominal charges as they are relieved from keeping the share certificates and saved from stamp duty, etc., during transactions. But the regulator should review the tariff anomalies and initiate rationalisation process to benefit retail investors.

SEBI might also instruct the depositories to refrain from levying other hidden charges. As the companies also benefit from the demat process, they should bear a part of the charges.

The demands from the companies should be presented through NSDL, to whom the depositories perform the agency business. The regulator should hear the retail investors directly or through the media, so that foolproof reforms can be brought in, which would enthuse the market players at large.

C. P. Velayudhan Nair

Kochi

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

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