In a move to address issues related to incorrect securities transfers within demat accounts, the Securities and Exchange Board of India (SEBI) has implemented a fresh solution.
The market regulator had previously urged depositories to implement a one-time-password (OTP) authenticated system to obtain customer consent for off-market securities transfers.
However, concerns were raised by depository representatives who sought an OTP confirmation process due to difficulties encountered when rectifying erroneous transfers.
Formation of Collaborative Committee
Acknowledging these concerns, SEBI has now established an alternative process that eliminates the need for OTP verification.
This development was detailed in a directive issued on 8 August.
Under this new framework, depositories are required to establish both internal and joint committees to investigate and address wrongful transfers occurring within and between depositories.
Composition of the Committee
The committee is mandated to be led by a Public Interest Director from the depository and should comprise a minimum of three members, including the chief executive.
Additionally, the depository is tasked with presenting all pending cases of wrongful transfers before this committee.
Subsequently, the committee will conduct a thorough examination of such cases, allowing both parties an opportunity for a fair hearing.
Following the assessment of documentary evidence and the hearing process, the committee will render a decision, substantiated by written explanations.
Execution of Committee Decisions
Depositories will act in accordance with the committee’s determinations and will notify the transferee via their registered email address about the committee’s verdict.
