Date:15/09/2005 URL: http://www.thehindubusinessline.com/2005/09/15/stories/2005091503071500.htm

Back When discount was sought to buy demat shares!

Our Bureau

Chennai , Sept. 14

HOW many of you are holding the shares of obscure companies whose stock price was not even worth looking at for years? But now with the indices climbing, all kinds of stocks have started soaring. But try selling the shares in paper form and you'll find there are no buyers. Or, the buyers want a 15 to 20 per cent discount on the market price.

Barely seven years ago, the story was diametrically different. Mr C.J. George, Managing Director of Geojit Financial Services, recalls that in 1997 when the NSDL (National Securities Depository Ltd) came into being, "ours was one of the first application to become a DP (depository participant). We wanted to promote the DP culture. In 1998 when the ICICI Bank came out with an IPO, about 55 per cent of the total demat allotment was for Geojit clients."

He convinced a Kerala bank, his client, to apply for demat shares and it got an allotment of 50,000 shares. "A few months later, they called us and asked us to sell the shares. But there were absolutely no buyers for demat shares!"

He then rang up NSDL and sought help and was advised to approach the UTI member on the NSDL board, who was in charge of UTI investment decisions. "He told me that the UTI is buying ICICI Bank shares from the market, so ask him. When I did, he said: `Okay, we'll buy the shares in demat form, but give me a 10 per cent discount'!"

Confronted with "this madness", says Mr George, he had no other option but to "buy the bank's shares in demat form, send them for remateriasation to physical certificates and then sell the shares in the market. Can people imagine such a scenario today?"