Several depositories are closing demat accounts of customers with too many accounts. This is after National Securities and Depository Ltd asked depository participants to submit lists of customers having more than 20 accounts with common addresses.
The move comes in the wake of a Sebi (Securities and Exchange Board of India) crackdown on banks and intermediaries involved in the IPO scam.
The deadline for the depository participants to deliver their reports was January 15. But, till last week, only 70 had filed reports. Of these, 50 claimed that they did not find any instance of multiple accounts being held by an applicant.
Several others wanted more time, NSDL managing director CB Bhave told Business Standard last week. He could not be contacted on Tuesday.
Even as some depository participants are buying time from the NSDL, the managers of erring depositories are busy contacting customers to wind up their accounts in order to ensure a clean image for themselves.
Sources familiar with the modus-operandi of the multiple-application racket said, several depository participants, maintaining these accounts for a long time and aware of their end purpose, were now rushing to close them to avoid regulatory wrath.
Sources close to the development said in the multiple-application racket powerful financiers got deals executed through a clutch of brokers.
Brokers then pass on the money to a host of individual operators, usually chartered accountants, who are engaged primarily in keeping active accounts in the names of real (but not actual holders) people, which are used for filing multiple applications.
These operators ensure that intermittent transactions take place to keep bank and demat accounts active. They are hand-in-glove with banks and depository participants that finally help execute the entire process.
Quick move
-
Several depository participants are winding up multiple demat accounts to cover past mistakes
- More than two-thirds of the depository participants have asked for more time to deliver reports on multiple accounts
- Financiers, banks, brokers, depository participants and chartered accounts are partners-in-crime in the multiple application racket
More from rediff