Stock Market: New Demat Rules

On 1st July, the Securities & Exchange Board of India (SEBI) issued fresh guidelines for physical statements of demat account-holders. It said that for accounts which have no balance in their account, and have no transactions for over a year, the depository participant (DP) need not send a physical statement to the account-holders. Since August 2012, DPs had to send a physical statement. Electronic statements of the accounts will continue to be sent to beneficial owners (BO) or account-holders whose e-mail addresses are registered with the DP. To decide whether an account meets the zero balance criterion, securities which have been suspended will not be relevant for the calculation. Moneylife (issue dated 10 July 2014) had pointed out that several investors did not understand the costs of holding dematerialised and were paying annual charges for shares of companies that were suspended from trading or had vanished. On 19th June, chairman of SEBI, UK Sinha, announced a slew of decisions to ‘revive the capital market’. But the proposal for compulsory demat of shares was deferred.

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Regulation: SEBI Warns MFs

SEBI has warned some mutual funds for breaching norms involving the minimum number of investors a scheme should have. SEBI rules mandate that there should be at least 20 investors in a mutual fund scheme and no investor should hold more than 25% in a scheme. SEBI found that 69 schemes have violated the norms. In one case, retail investors comprised just 2% of investors. “This has to be stopped,” thundered UK SInha, SEBI chairman, at the 10th CII mutual fund summit.

Mr Sinha also hinted that the regulator would take appropriate regulatory action against fund houses that fail to comply with this rule.  SEBI has given ‘soft warnings’ to mutual funds so far, said Mr Sinha. What he did not say is that the issue of poor retail participation in mutual funds has been plaguing the industry for than 15 years. For a long time, debt schemes of mutual funds were being used by corporates as a tax dodge. SEBI has periodically criticised fund houses for low retail participation.

Recently, SEBI tweaked the regulations for debt schemes. It has asked fund houses to maintain a minimum of Rs20 crore assets in debt schemes on half-yearly rolling basis in all open-ended debt-oriented schemes. SEBI has also asked fund houses to keep the minimum subscription amount in debt and balanced schemes at Rs20 crore, during a new fund offer. 

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Cards: Credit Card Spends Rise 30%

“Card spends are increasing and most consumers are not even revolving the card dues. As a result, banks have been more relaxed on increasing the credit limit for consumers,” said an unnamed bank executive to Business Standard.

In April 2013, Axis Bank recorded a transaction value of Rs3.17 crore on ATMs and of Rs58.45 crore on point of sales (POS) terminals. In April 2014, on ATMs, it had shot up to Rs8.8 crore and on POS to Rs103.4 crore. In combined value, that meant a massive jump of 77%.

While loan growth is slow, credit card spending has grown by 30%. This growth is driven by higher usage per card, rather than a larger number of cards in use.

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