Recommendation to increase paid-up capital of share brokers by 5 times

The parliamentary sub-committee has recommended increasing the paid-up capital of share broker companies. A sub-committee formed by the Finance Committee of the House of Representatives to study the capital and money market has recommended increasing the paid-up capital to Rs 10 crores.

At present, the paid-up capital of broker companies is Rs. 2 crores. The sub-committee has recommended to increase it five times to 10 crores.

The sub-committee has also set a time limit for this. A sub-committee convened by MP Ram Kumari Jhakri has recommended raising the paid-up capital to Rs 10 crores by the end of Ashadh, 2079 BS.

The sub-committee has also recommended encouraging broker companies to merge. If the broker companies want to merge, the sub-committee has recommended encouraging the merger by giving tax relief for a fixed period.

The sub-committee also said that broker companies should be encouraged to provide services by expanding their branches at the state and local levels. The committee has also recommended permitting broker companies that want to be retail market dealers by specifying the capital limit, conditions, and criteria.

The issue of providing broker licenses to banks, which is a complicated issue in itself, has also been raised by the sub-committee. It has recommended giving broker licenses to the banks with some conditions.

Although issuing broker licenses to banks will develop capital market literacy and create a positive impact on demand, it comes with risks of insider trading. This is why the sub-committee has recommended giving conditional permission to banks.