I AM thankful to Daulal Damani in "Dernat should be optional,, (Letters to the Editor, August 21/22) for bringing to fight the financial loss suffered by genuine investors who want to sell their shares in physical form. Mr Darnani has lost more than Rs 10,000 on sale of 50 shares of Hind Levers - the bluest of the blue chips. He held the shares in physical form. As his village had no dematerialisation facility, he had to come all the way to Calcutta to sell his holding to meet emergency ftind requirement.
It is true that no broker is ready to take the delivery in physical form at market price. He had to find an obliging broker through friends who agreed to take the shares in physical form at a discount of 10 per cent Where is the liquidity of these high-profile shares? Dernat costs money and time. By the time one opens a depository account, the price of the scrip changes. It might have come down and one loses money. Bes, ides one has to pay charges for keeping the account.
For long-term investment, the government allows the investors indexing which cannot be done after dernaterialisation. In order to save litigation after one's death, the government and big companies advise their shareholders to hold the shares in joint account. Thus genuine investors make their holding in joint names. Suppose, A has four children to whom he wanted to give his hold-ngs after his death. He divided them and opened different joint accounts with himself as the first holder. 'Mis was done with a purpose to get the dividend from all the joint holdings in his name as long as he lives. But if he wants to sell them, he will have to open as many accounts as there are in the joint names. Say, he has 200 shares of Hind Lever in four folios, he will have to open four accounts and get them dematerialised to get the market price.
Genuine investors are longterm investors who rarely go to the market. How demat will benefit them is Dot at all understandable. Speculators and big guns who Visit stock exchanges every day to buy or sell shares may have
benefited though. Sebi says that demat checks wrong delivery and return of bad delivery. It also says that there would be no postal thefts. For these things, they must see that wrong deliveries are stopped and the postal department should be held responsible for the articles accepted by it. Sebi and the finance minister must look into the grievances of the small investors and see that these people get the market price in physical delivery also.
Dernaterialisation should be made optional. If the Sebi does a feedback study, it is sure to find that real investors are actually being forced out of the market by such actions.
C L Singhi Howrah
