The financial world has evolved dramatically over the last decade and so has the number of investment avenues for the investors. But galore of investment avenues makes the average investor confused and most often he falls prey to financial mis-information. And even if the investor manages to spread his or her investments in different baskets (investment avenues), keeping a tab on the same becomes difficult as all the investments under different asset classes are not available at a single point of contact. This is possible only through technological innovation as it acts as an enabler in making life easy for people.
Thus, realising the same, capital market regulator – the Securities and Exchange of India (SEBI) has proposed to bring more classes of financial instruments, including insurance policies and fixed deposits, under the ambit of asset categories that can be held in demat or electronic form. The proposed move is expected to make it simpler to maintain and safe-keep various kinds of financial instruments, as the risks like loss and theft get minimised in demat form, as compared to the physical paper form.
At present all securities traded in capital markets, such as equity shares and mutual funds can be held in demat accounts (maintained by two depositories NSDL and CDSL), which come under SEBI's jurisdiction. But now, SEBI has also proposed to initiate steps that would enable an investor to view the details of his holdings and transactions across all asset classes through a single consolidated statement. Thus, to expand the list of asset classes which can be held in demat form and to take this forward, SEBI (Depositories & Participants) Regulations needs to be amended, to enable depository to share the necessary information/data with its Strategic Business Unit (SBU) with respect to the assets/instruments held by them for the purpose of generation of consolidated statement.
Moreover, to keep a tab on the dematerialisation process, SEBI’s board has approved a proposal to amend the existing norms to enable the market regulator and the depositories to take action against issuers found non-compliant with regulations related to timely dematerialisation of shares, maintenance of proper records etc. These regulations also include issuers' agreement with the depositories, carrying out reconciliation of share capital, among others.
We are of the view that, the proposal to make fixed deposits, insurance policies, and investment products of Post Offices among others, dematerialised would enable investors to access all there securities in one single demat account (in case if they maintain one). This in turn would provide ease, convenience and safety, while managing their investments. Moreover, investors would be able to track their investments in a seamless manner and will be able to access a consolidated statement which will provide details of investments pertaining to different asset classes. Such a consolidated statement will help investors to take timely decision while reviewing their investment portfolio.
However, care should be taken by the investors to cross check their details online (including personal and transaction details) after availing demat services for their investments.