Sucheta Dalal :E-stamping
Sucheta Dalal

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Feb 12, 2007

Last week, the Stock Holding Corporation of India (SHCIL) began a pilot e-stamping project in Gujarat. SHCIL has bagged a five-year contract to electronically stamp (e-stamp) documents in the wake of the Telgi scam. Its website says the government has appointed SHCIL as a central record-keeping agency, responsible for registration, imprest balance administration and e-stamping. But SHCIL has a chequered record, despite being owned by public financial institutions and insurance companies. It claims to be India’s largest depository participant, but got into trouble over the financing of a Kolkata broker during the Ketan Parekh scam. This time, the regulation of its e-stamping operations is unclear. Technically, SHCIL would have to be regulated by the depositories under which it functions —the National Securities Depository or Central Depository Services. The depositories in turn are regulated by Sebi with regard to their market operations. But just as NSDL’s tax administration project is outside Sebi supervision, NSDL is clear it has “no authority to monitor non-DP activities of its DPs”. It is worrying if SHCIL’s e-stamping operations are not to be monitored either by Sebi or NSDL. SHCIL’s website also does not reveal its shareholding details or those of its stock-broking subsidiary, SHCIL Services Ltd. Top SCHIL officials did not provide details when asked. Given that Rs 47,000 crore worth of transactions requiring stamps occur each year, it is imperative that regulation, supervision and accountability for the project are clarified.

Creaking infrastructure

Stock indices are scaling new peaks everyday and over-subscription to IPOs are making new records; yet, ironically, capital market infrastructure is creaking under thin margins and high fiduciary responsibilities. The business is not attracting new registrar and transfer (R&T) agents. This shortage was exacerbated after Sebi punished Karvy for its role in the Demat Scam. Sebi’s disgorgement order is structured in a way that Karvy is unlikely to get any relief even if it cleans up its business and pays the penalty. Sebi’s “unique and strange order” (according to Securities Appellate Tribunal) has sought the disgorgement of Rs 51 crore from Karvy, pending completion of investigation into its role. So companies planning to raise funds remain short of registrars.

E-safety scores

Credit card users worried about the 15,255 fraudulent ticket purchases reported by Kingfisher Airlines will be relieved at certain details. Although the police traced part of the fraud to some employees of a Mumbai hotel, not all stolen card information was from Mumbai. Banking sources say 60-70 per cent of the cards used in the fraud belong to foreigners. Interestingly, bankers say the Indian Railway Catering and Tourism Corp (IRCTC) offers one of the safest e-ticketing systems, despite being the third largest merchant operator for e-business transactions. IRCTC has strong security systems, is diligent about passenger registration and insists on sending ticket via courier to create yet another layer of identification. The airline Indian asks that identification cards to be presented during check-in must be specified while booking. These may seem cumbersome processes, but they ensure better safety.


Two key persons in the financial scams of 1992 and 2000 passed away recently. One was Acharya Arun Dev, a controversial who surfaced in 1994 to bail out the Harshad Mehta group by claiming ownership of the ‘benami’ shares they had introduced into the market. He later struck another deal to acquire Fairgrowth Financial Services and then sold it to one Karsanbhai Patel (not from Nirma). Ramesh Parekh, former chairman of Madhavpura Mercantile Co-op Bank who had 221 cases against him for illegal advances to Ketan Parekh and his own companies, also passed away in January. His death could delay the resolution of cases filed against Ketan Parekh.

-- Sucheta Dalal