Indicted DPs have 60% of investor accounts

Depository participants under the scanner of the Securities and Exchange Board of India account for as much as 60 per cent of the investor accounts in the country, according to industry estimates.

Fifteen depository participants, including several leading banks, host over 350,000 investor accounts, accounting for nearly over 40 per cent of the 760,000 investor accounts with National Securities Depository Limited.

At least, 10 of these DPs have over 100,000 investor accounts with the Stock Holding Corporation of India Ltd. Banks like ICICI Bank, Citibank, Standard Chartered lead the way with over 300,000 accounts each with NSDL alone.

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HDFC Bank, which had been asked not to open fresh accounts, has close to 600,000 accounts with NSDL. Two other leading banks, IDBI Bank and ING Vysya Bank, which have been directed not to open fresh accounts, hold another 200,000 accounts each.

Against NSDL's 76,000,000 investors' accounts, rival Central Depository Services Limited (hosts around 15,000,000 investor accounts. Many of the firms enlisted by Sebi for inspection are participants of both NSDL and CDSL.

Sebi through its interim order relating to the multiple applications racket in initial public offers passed last week had directed NSDL and CDSL to inspect the records of 28 depository participants in the country while banning Karvy and Pratik DP for their alleged involvement in the scam.

NSDL and CSDL were asked to conduct inspection of the DPs and submit a report within a period of one month to verify whether all the demat accountholders of these DPs are genuine and KYC norms laid out by Sebi have been duly complied with and take appropriate action against suspect accounts on verification.

The inspection suggested by the capital market regulator seems truly like a herculean task.

NSDL chairman CB Bhave and CDSL Managing Director and CEO V V Raut were not available for comments.

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