DBOD.No. Dir.BC.115/13.07.05/98-99
December 09, 1998
Agrahayana 18, 1920 (Saka)
All Commercial Banks
Dear Sirs,
Dematerialisation of securities
held as collaterals
Please refer to our circular DBOD.
Dir. BC.153/13.07.05/97 dated December 9, 1997 wherein it was advised that banks
may settle transactions in the eight securities as notified by Securities Exchange
Board of India (SEBI) only through depository. SEBI has now announced, commencing
from January 4, 1999 mandatory trading by all of 12 securities in only demat
form on major stock exchanges as per list enclosed (Annexure I). Further, commencing
from February 15, 1999, another 19 securities will be included in the compulsory
demat list (Annexure II). After the commencement of mandatory trading in demat
form, the banks will not be able to sell the shares of the companies listed
in Annexure I and II if held in physical form.
It is possible that some banks would
have given advances to their clients against physical shares of companies listed
in the Annexures. In the event of such borrowers defaulting on the repayment,
the banks will not be able to sell them and the collaterals may turn to be of
nil value. Banks are therefore, advised to take immediate steps to get them
dematerialised well before the dates announced by SEBI regarding compulsory
trading in demat form.
2. Banks are also advised to watch
for any SEBI announcements mandating trade in demat form in other scrips also,
so that necessary actions are taken for safeguarding the security well in advance.
Yours faithfully
(Radhe Shyam)
Annexure I
SEBI mandated list of securities for compulsory trading by all from January
4, 1999
1. Bank of India (BOI)
2. Bharat Petroleum Corporation
Ltd. (BPCL)
3. BSES Ltd.
4. Housing Development Finance Corporation
Ltd. (HDFC)
5. ICICI Ltd.
6. IndusInd Bank Ltd.
7. Industrial Development Bank of
India (IDBI)
8. Infosys Technologies Ltd.
9. Larsen and Toubro (L&T)
10. State Bank of India (SBI)
11. Videsh Sanchar Nigam Ltd. (VSNL)
12. Wipro Ltd.
Annexure II
SEBI mandated list of securities for compulsory trading by all from February
15, 1999
1. Asea Brown Boveri Ltd. (ABB)
2. Asian Paints Ltd.
3. Associated Cement Company Ltd.
(ACC)
4. Bajaj Auto Ltd.
5. Birla Global Finance Ltd. (BGFL)
6. Castrol India Ltd.
7. Cochin Refineries Ltd.
8. Dr. Reddy's Laboratories Ltd.
9. Gas Authority of India Ltd.
(GAIL)
10. Gujarat Ambuja Cements Ltd.
11. Hero Honda Motors Ltd.
12. Hindustan Petroleum Corporation
Ltd. (HPCL)
13. Madras Refineries Ltd. (MRL)
14. Mahindra and Mahindra Ltd. (M&M)
15. NIIT Ltd.
16. Ranbaxy Laboratories Ltd.
17. Tata Tea Ltd.
18. Thermax Ltd.
19. TVS Suzuki Ltd.