The National Securities Depository Ltd (NSDL), slated to commence operations on November 8, moved one step closer to getting the 'commencement of business certificate from the Securities and Exchange Board of India (Sebi).
Managing director C B Bhave said the depository has tied up with Oriental Insurance Company for covering the investment risks of depository participants and investors. There were basic things that we were working on to meet the requisite criteria for commencement of business. One was net worth and the other was insurance cover. Formalities in both the cases have been completed. The agreement for insurance cover was signed this week, Bhave said. He, however, declined to comment on the main features of the scheme worked out for the depository. According to regulations, the depository needs to have a net worth of not less than one crore.
The insurance cover, regulations say, needs to indemnify the beneficial owners for any loss that may be caused to such beneficial owners by the wrongful act, negligence or default of the depository or its participants or of any employee of the depository or participant. The depository is carrying out tests to check the network. It is also undertaking tests that will establish standard transmission and encryption formats for electronic communication of data between the depository, participants, issuers and issuers agents.
We initially carried out in-house tests of the network checking the continuous transmission of information. This week, we did the same thing from the Stock Holding Corporation office. Further tests will be carried out through issuers and registrar offices, Bhave said.
Meanwhile, National Securities Depository Ltd signed its first tripartite agreement on October 29 along with Siemens and its registrar, MCS, for joining the depository. The company and its registrar have written to all shareholders holding 1,000 shares or more. According to a release issued by MCS, if these shareholders agree to join the depository, 82 per cent of the capital of Siemens would be in electronic form.
