Mr. Dev Prakash Gupta is CEO of CDS and Clearing Ltd. He is currently pursuing for Doctoral Degree (Phd.) from Tribhuvan University. He holds a MBA and M Phil. Degree with concentration in Capital Markets from Kathmandu University. He has served as Senior Program Officer at HELVETAS Swiss Intercooperation Nepal before joining to CDSC.
- What is the latest update from CDSC in terms of dematerialization of shares?
We have already dematerialized 28.50 crore units of shares. We are dematerializing 2270 units/minute. We have 48 Licensed Depository Participant (DP), 10 DP in pipeline, 141,197 Beneficial Owners’ Demat account and all listed companies are expected to register with us by the end of Poush 2072. We daily update these data on our webpage.
- What is the process to dematerialize share certificate?
First of all the investors must open a demat account through a licensed DP. After opening an account investor can leave their share certificates to DP along with duly filled form to begin dematerializeprocess. Then, DP will handle the rest process of dematerialization.
Alternatively, investors can fill the required form at DP and take it to the respective RTS for signature verification. After signature verification, investor can bring that form to the DP for creating a DRN. After DRN is created the investor should submit all the forms to the respective RTS for the dematerialization of share.
- How long does it take to dematerialize share?
After the DRN is submitted to the RTS, the dematerialization process should complete within 3 business days at the maximum. The time taken varies from one RTS to another RTS depending upon their work load.
- Investors have complained that the dematerialization process have taken more than 2-3 months. Whys is that so?
After I have joined CDSC, we have streamlined the process of dematerialization by sorting out existing technical difficulties. As dematerialization process is an automated process, the current load shedding and fuel crisis has also hampered the efficiency of RTS/DP.
The third reason being, Like I mentioned earlier if an investor leaves share certificate to DP for dematerialization then the time taken for signature verification, creation of DRN may be longer as DP do those activities in bulk. Furthermore, in many cases the signature on the form does not match the signature on the record of the RTS. If this happens then, the dematerialization process cannot go forward until the signature is verified. So, I urge all investors to follow up with their respective DP/RTS if their shares have not been dematerialized within seven days.
- What are the advantages of trading in demat form?
When we trade in dematerialized form, the investors can get the shares in their account within 3 days as we run 3 days settlement process. The investors can start selling their shares from 4th
day if they wish to do so. The demat form also eliminates the risk of Blank Transfer (BT) and shortens time taken for transfer of ownership.
- How will the fractional shares be credited in demat?
There is no issue to credit the fractional shares into a demat account. We have been crediting fractional shares into the respective demat account. In Nepal most of the companies convert the fractional shares into round figure either by taking extra money from the investor or automatically converting fractional shares into round figure.
- All shares will be traded in Demat form from Magh 01. What is the status of companies signing up with CDSC for dematerialization process?
Only 26 listed companies are remaining to sign an agreement with us to go into demat form .We have a dedicated team of employee to follow up with these companies on daily basis. 99.80% of the frequently traded companies in NEPSE have begun the process of agreement with us.
- Will there be extension on the deadline of Magh 01?
No there will not be extension on the deadline of Magh 01. I want to assure investors that the shares will only be traded in Demat form from Magh 01. We have made clear to those 29 companies that trading of their share will be halted if they do not go into dematerialize process by the deadline. I do not expect any major effect of this on NEPSE as 99.8% frequently traded companies have already signed agreement with us.
- After Magh 01, DP/RTS will be overwhelmed with request to dematerialize shares as many investors will rush to get their shares dematerialized. How will CDSC handle this?
In an anticipation of overwhelming response from the investors to dematerialize their shares, we have placed plan to minimize its effects. We will be providing trainings to the RTS new to our system of dematerialization to facilitate the process. For example, we will be sending staffs to Citizen Investment Trust, RTS of Chilime Hydropower Co. Ltd., to train their staffs on this dematerialization process. The RTS/DP who has been working on dematerialization process should be able to handle the additional work load through their own existing management plans. We are always there to help any RTS/DP who may need additional expertise from our side.
- What will be the benefit to the investors outside Kathmandu Valley after the implementations of CDSC system?
DP services are available at 66 locations of 44 districts. The big commercial banks with wider network outside Kathmandu Valley have signed up for a DP through their subsidiary companies. The investors can dematerialize their shares through the branches of these banks located outside Kathmandu valley. As they get their shares dematerialized they can continue the regular trading from their respective brokers. Thus, we have covered investors in major cities of Nepal.
- What message do you have for the investors?
We are committed to provide quality service within the reasonable timeframe. We are continuously improvising the service we provide to the investors.