Monday, April 22, 2024
HomeOpinionsRequest for digitization of records related to a major financial sector

Request for digitization of records related to a major financial sector

Also Read


In a world rapidly advancing towards digitization, India is no exception. The Government of India, led by Prime Minister Narendra Modi, has championed numerous reforms across sectors, focusing on modernization, transparency, and ease of access. One noteworthy initiative in this journey is the swift digitization of government records.

As this digital wave sweeps through various governmental functions, there remains a crucial area that requires immediate attention – the digitization of the financial sector, particularly records related to companies. This article seeks to highlight the significance of digitization in the financial sector, especially for startups and shareholders, and makes a fervent appeal for much-needed reforms.

1. Enhanced Website Information: Bridging the Information Gap

The Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) websites are key sources of information for shareholders. However, the presentation of company data on these platforms needs improvement. A vital step would be to display company names in a chronological order, starting from their initial listing or authorization to raise funds.

This should be followed by a comprehensive mention of all subsequent changes, such as mergers, acquisitions, and name changes. This format ensures that investors can access the relevant information without undue difficulty, thus promoting transparency and informed decision-making.

2. Simplifying Dematerialization for All Shareholders

SEBI’s introduction of the Basic Services Demat Account was intended to facilitate the demat process, particularly for those holding small-value shares or limited quantities. However, a major drawback exists – a shareholder with a normal Demat Account in one depository cannot open a Basic Services Demat Account in another. This limitation creates unnecessary hurdles and discourages shareholders from opting for dematerialization.

Rectifying this rule by permitting the opening of a Basic Services Demat Account with a depository different from the one hosting the shareholder’s regular Demat Account would undoubtedly promote broader participation in dematerialization.

3. PAN and KYC Update Simplification: A Clear Path Forward

SEBI’s recent warning regarding freezing shares without linked PAN (Permanent Account Number) and KYC (Know Your Customer) details by March, 2023 but subsequently extended upto September 30, 2023, underscores the urgency of the situation. Unfortunately, the process for updating PAN and KYC remains unclear, leaving shareholders in a state of confusion.

A potential solution, until the aforementioned comprehensive company data becomes accessible, is to introduce a system of “holding letters” by SEBI itself, akin to those issued by mutual funds. These holding letters would represent shares in physical form and can be converted into demat holdings after the resolution of discrepancies. This streamlined process not only simplifies matters for shareholders but also enables authorities to collate crucial information efficiently.

Conclusion: A Plea for Urgent Action

In the light of these pressing issues, it is crucial for India’s lawmakers and regulatory bodies to address the call for reform in the financial sector. Recognizing the potential impediments faced by ordinary, small, and senior shareholders, a swift response is essential. Digitization has the power to democratize access to information, level the playing field, and foster a conducive environment for businesses and investors alike. As India marches toward a digitally empowered future, the financial sector must not be left behind.

In the spirit of Prime Minister Modi’s progressive methodologies, it is hoped that these matters will receive the attention they deserve. By implementing reforms and bolstering the digitization of financial sector records, the Indian government can reinforce its commitment to transparency, inclusivity, and efficiency. In doing so, it will not only empower shareholders but also strengthen the foundation of the nation’s financial landscape.

  Support Us  

OpIndia is not rich like the mainstream media. Even a small contribution by you will help us keep running. Consider making a voluntary payment.

Trending now

- Advertisement -

Latest News

Recently Popular