Sucheta Dalal :SHCIL : The story so far
Sucheta Dalal

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SHCIL : The story so far  

Jul 13, 2007

12 Feb, 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.

Curious developments
12 Mar, 2007
The Stock Holding Corporation of India’s (SHCIL) e-stamping contract is now attracting the attention of government investigation agencies. After the massive fake stamp scam (Telgi scam) the government decided to launch electronic stamping of revenue documents and SHCIL bagged the mandate to become the Central Record Keeping Agency. IFCI, which has a 16.9 per cent stake in SHCIL, was a project consultant for awarding the e-stamping contract. The technology will come from Crimsonlogic Global of Singapore. Curiously, the Ministry of Commerce on 7 November 2006 permitted SHCIL to make the technology payment to Unitec Value Solutions Ptd Ltd, instead of paying Crimson Logic directly. development...

SHCIL’s proliferations
19 Mar, 2007
The Bombay Stock Exchange website lists SHCIL Services, a brokerage firm, as promoted by the Stock Holding Corporation of India (SHCIL). However, the parent informs us that SHCIL Services is not a subsidiary. True. It is not any more. Sources in investigation agencies reveal that 76 per cent of the equity has passed into private hands but there is no public disclosure of shareholding by this large public entity. In fact, a search of the Ministry of Company Affairs (MCA) website reveals that SHCIL has quietly spawned five new entities. The oldest of these is SHCIL Commodities and Derivatives Trading incorporated in 1995. The rest have…’s proliferations...
Convoluted structure
26 Mar, 2007
The twists and turns in the holding pattern of Stock Holding Corporation of India (SHCIL) and its subsidiaries continue to unravel and confound. SHCIL Services Ltd (SSL), a brokerage entity registered with the Bombay Stock Exchange (BSE) is 76 per cent owned by private entities, but still claims the parent SHCIL as its promoter. We now discover that the parent is also the sub-broker (or dependent) of SSL following a registration granted by the regulator on 18th May, 2006. Apparently neither the stock exchange nor the Securities and Exchange Board of India (Sebi) found it necessary to demand a separation of ownership and infrastructure. Since very little information about SSL is publicly available, we went into its history. It was registered in February 1995 as Depository Company of India Ltd… structure...

Action time
02 Apr, 2007

Institutional shareholders of the Stock Holding Corporation of India (SHCIL), which include SUTI, LIC, IDBI, IFCI and GIC (who together hold over 51 per cent of its equity), have finally bestirred themselves to ask a few questions about the many subsidiaries it has spawned and their quiet subsequent privatisation. According to an institutional source, “at SHCIL’s 18th Annual General Meeting on 31st August, 2005, it was permitted to pump up to Rs 50 crore in SCHIL Service Ltd (SSL), so why the dilution without informing institutional shareholders?” The source says that shareholders are finally beginning to work out the value of their shareholding in SHCIL. For instance, they want a watch on SHCIL’s holding in the National Stock Exchange (NSE), which is now valued at around Rs 1000 crore. They are worried about the implications of SHCIL’s many quiet moves without informing its shareholders and… time

Escaping public scrutiny altogether
09 Apr, 2007
Isn’t it strange that stringent disclosures mandated by Listing Agreement do not apply to quasi-public sector market intermediaries? public...

Action begins
16 Apr, 2007
The government of India has ordered a detailed probe into the goings-on at Stock Holding Corporation of India Ltd (SHCIL) that have been detailed in these columns over the last six weeks. IDBI Bank (which owns over 16 per cent of the shares) has been asked to lead the investigation and on Friday night, the chief general manager, R K Bansal, was asked to take charge at SHCIL as the interim head and also told to back up its Information Technology (IT) system and ensure that no data and information is tampered with. SHCIL’s chairman and managing director Jayaraman Iyer has been asked to go on leave. We learn that two more directors are being appointed over the weekend to conduct a detailed investigation into SHCIL’s operations, its subsidiaries and its e-Stamping contract. Meanwhile, ICICI Bank, another 16 per cent shareholder… begins...

Govt finally wakes up to SHCIL’s dubious acts
16 Apr, 2007
The government has finally ordered an investigation into Stock Holding Corporation of India (SHCIL), India’s largest Depository Participant (DP) for a series of shenanigans documented by The Indian Express over the last few weeks. finnaly...

Refund problems
30 Apr, 2007
Institutional shareholders of Stock Holding Corp of India Ltd (SHCIL) met last week to take stock of various decisions of Jayaraman Iyer, the chairman and managing director who has been sent on leave. The Indian Express has reported many of these, but new ones continue to crop up. One such is a complaint by senior citizen Maria Teresa Menezes, who has complained to the consumer court that SHCIL sent her a refund cheque of Rs 17,000 long after she had invested Rs 250,000 in 8 per cent RBI Relief Bonds. She was told this was the “excess amount invested minus interest already paid” to her. On approaching the forum, she learns from SHCIL’s submissions… Prob...


Stock Holding Corp takes note of its rot, does nothing to help
30 Apr, 2007
SHCIL is India’s largest depository company and acts as custodian to the capital market transactions of all of India’s top public sector financial institutions, insurance companies and nationalised banks. On April 25, the board of directors of Stock Holding Corporation of India (SHCIL) met for the first time in Mumbai after R K Bansal, a senior official of IDBI Bank had taken charge of management as whole time director. SHCIL’s chairman and managing director (CMD) R Jayaraman Iyer was sent on compulsory leave approximately 10 days earlier. hold...

SHCIL siblings
07 May, 2007
Among the many entities surreptitiously floated by Stock Holding Corporation of India’s (SHCIL) management in the past six month was SHCIL Hannobe Technologies Pvt Ltd, registered at Cochin. The company, it turns out, is owned by a private individual called Boney Sekh, who is a former employee of CrimsonLogic of Singapore with which SHCIL has a technology transfer agreement for the e-stamping project. Boney Sekh had worked at digitising documents for SHCIL, but it is not clear why he has been permitted to use the SHCIL logo on his website sibiliings...


Defamed whom?
14 May, 2007
A strange media report in a frontline Chennai-based newspaper has perplexed the new management at the Stock Holding Corporation of India (SHCIL). The agency report quotes Bharat Momaya, referred to as a vice-president of SHCIL, saying that a Mumbai Court has “issued summons to a former member of Singapore Parliament (Ramasamy Ravindran) for allegedly making defamatory statements against” SHCIL. The report attributes the action to SHCIL’s managing director R Jayaraman Iyer, who has been sent on compulsory leave prior to a management change in April. The report says that Ravindran is being sued for making negative comments about the e-stamping business. Ravindran has, in fact, made serious charges against the SHCIL management and sent copies of his statement through his lawyers to the finance minister, the regulators, government investigation agencies as well as the Central Vigilance Commission. The new SHCIL management says… whome...


SHCIL fraud: Probe team has umpteen questions to answer
21 May, 2007
Last week, investigations into the fraud at Stock Holding Corporation of India Ltd (SHCIL) took another decisive leap with the appointment of KPMG’s Fraud Detection and Forensics Advisory team to investigate a slew of management decisions that we have exposed in the past months. Two independent directors have also been inducted to the SHCIL Board — G Ramamurthy who is reportedly a corporate ethics expert and N Balasubramaniam, a corporate governance and strategy expert. fraud...


28 May, 2007
Stock Holding Corporation of India Ltd (SHCIL) has now petitioned the Company Law Board (CLB) seeking an investigation into SHCIL Services Ltd (SSL) — once its wholly owned subsidiary. In the last several weeks, we have exposed how SSL was virtually filched by SHCIL’s own chairman, right under the nose of the board of directors. The CLB petition, under section 237(b) of the Companies Act, explains how SHCIL’s shareholding was diluted through “clandestine and fraudulent” allotment of shares to outsiders. The actions are especially brazen because public financial institutions, banks and insurance companies hold 75 per… vs SSL...

04 Jun, 2007
The new team at SHCIL is discovering to its horror the extent to which it has been paying for SSL’s staff, resources, infrastructure and business development while SSL has quietly obtained permission from the Securities and Exchange Board of India (Sebi) to get into businesses that directly compete with it. Over the last six months, SSL has been registered as a broker (with the Bombay Stock Exchange), as a Portfolio Management Services advisor and a Depository Participant (DP). The last mentioned puts it in direct competition with SHCIL, which is the largest DP and custodian services company in the country with all large public sector institutions and banks as its clients. As reported earlier, SHCIL’s shareholding in SSL has been “fraudulently”… vs SHCIL...

Operation rescue
10 Jun, 2007
The Ministry of Company Affairs (MCA) has come to the rescue of Stock Holding Corporation of India (SHCIL), India’s largest depository company, at the intervention of the Finance Ministry. On May 14, an investigation was ordered into the affairs of SHCIL Services Ltd (SSL), once a wholly owned subsidiary of SSL. D K Gupta from the Registrar of Companies has been asked to investigate under Sec 247 of the Companies Act the true ownership of SSL as well as who the beneficial owner behind the scenes is. As reported earlier, R Jayaraman Iyer, chairman and managing director of SHCIL, and S Ramanathan, CEO of SSL, had “fraudulently” and “surreptitiously” diluted SHCIL’s shareholding in SSL from 100 per cent to 24 per cent and allotted the shares to three unknown individuals Gopika Vaishnav, Vivek Vaishnav of… resc...

Shield SHCIL, not its defrauders
11 Jun, 2007
In 1992, when the National Housing Bank’s (NHB’s) deep involvement with Harshad Mehta became public, the government used all its powers to ensure that NHB, a subsidiary of the RBI, was protected and not wound up. But that scam was at least investigated by a Joint Parliamentary Committee (JPC) as well as the Central Bureau of Investigation (CBI). The goings-on at the Stock Holding Corporation of India Ltd (SHCIL), which I have reported over the past three months (in The Indian Express) are scandalous enough to have triggered a series of corrective measures by the government. However, there is also a clearly discernible attempt to contain the damage, even if it means protecting those individuals who participated in the fraud. SHIL...


-- Sucheta Dalal