Union Finance Minister P Chidambaram’s move to create a common demat account for all financial transactions has met with mixed reactions from traders.

Ashish Kumar Chauhan, MD and CEO, BSE Ltd, said: “It is an excellent initiative. It will go a long way in creating an investment culture in India.”

“By writing to one central record keeping agency, the tax man can now obtain a complete profile of financial information about an individual,” said a retired income tax commissioner. However, misuse can result in a risk of intrusion of privacy of an individual, he added.

Retail investors now have to start planning their finances with the help of a financial planner, well versed in all asset classes, felt Ashish Choudhary a retail investor. However, there is no clarity on whether commodity derivatives, which does not entail physical delivery of the commodity, would be considered a financial asset given that the commodity regulator now falls under the purview of the Finance Ministry, he added.

Those in favour of a single demat account, such as Shailesh Haribhakti , Chairman of consulting firm, DH Consultants, said: “The Finance Minister has encouraged single demat account for all financial assets, which would include stocks, insurance, mutual funds and debt securities. This would lead to superior management of the financial affairs of an individual. Since the enabling infrastructure is already with NSDL, what needs to be done is just roll out the idea.” Questions are also being raised on depositories charging investors based on transaction value instead of the number of transactions. “What is the extra effort taken by the depository to charge an investor according to the transaction value?” asks Arun Kejriwal, Founder KRIS Research.

“They could do well to follow banks which charge account holders on a per cheque book or cheque leaf basis instead of the amount written on a cheque.”

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