The proposal for a common demat account for investors across investment categories is set to be taken up next week by financial sector regulators when they meet next week.
The Financial Stability and Development Council (FSDC) that is scheduled to meet on May 13 will review the progress on the proposal that was mooted at its last meeting in February.
“There are a lot of technical issues that need to be resolved for a common demat account. For this, an inter-regulatory panel was set up that will brief the FSDC on the progress made so far,” said a senior finance ministry official.
Cautioning that bringing all financial assets of an investor under a single demat account, the official said this would require exchange of information amongst all financial sector regulators and creating a common database of investments. Based on the report of the inter-regulatory panel, the FSDC will chart out a course for the switch to the new system.
At present, investors require demat accounts to trade in equities, invest in certain kinds of mutual funds as well as exchange traded funds. While these can be traded through a common demat account, other financial assets such as insurance and pension products may also now be brought under the same account. Earlier, Chidambaram had also announced the proposal in the Interim Budget and said it would deepen the financial markets. “A number of steps have been envisaged to deepen the Indian financial markets. Among them are … To create one record for all financial assets of every individual,” he had said.
The plan was first discussed at the meeting of the FSDC in February this year as a measure to simplify norms for investors as well as create a common database on financial investments. The 10th meeting of the FSDC will be chaired by finance minister P Chidambaram and is expected to be attended by financial sector regulators including RBI governor Raghuram Rajan, among others.
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