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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)

Additional Chief General Manager

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.