State-of-the-art share depository built in Bombay
State-of-the-art share depository built in Bombay
By Madhu Nainan
BOMBAY (AFP): Construction of India's largest and most
advanced depository for shares is underway in New Bombay, a
satellite city across the harbor from the country's financial
capital, paving the way for computerized trading on Indian
bourses.
The Central Securities Depository, being built by the Stock
Holding Corp. of India (SHCIL) at a cost of US$33 million, will
be ready by mid-1995 and able to house all the securities
certificates in India.
SHCIL Managing Director R. Chandrashekharan said the 15 meter
(49.5 feet) building with 100,000 square feet (9,000 square
meters) of mostly underground storage space was modeled on a
depository in Switzerland.
"Our depository would be as large as the one in Zurich," he
said. "It will be robot-operated and human beings will not have
access to the vault."
He said project, spread over five acres (two hectares) in New
Bombay's business district, was the need of the hour and "part of
India's biggest share custodian's strategy to immobilize shares
and securities as a prelude to paperless trading."
Explaining the working of the "fire, water and pilfer-proof
vault", Chandrashekharan said a courier would hand over the
securities in a pouch to a computer operator at the main counter.
The operator will feed in data and the computer will instruct
the robot to "read" the codes on the pouch and place it at a
particular spot in the vault, he said.
Chandrashekharan said the project, which would usher in
paperless trading, would solve problems faced by investors and
custodians in India's rapidly booming capital markets, spurred by
the economic reforms of 1991.
He said computerized trading would cut transaction costs to
just 10 percent and ensure smooth dealings as demanded by foreign
investors, who have entered India in greater numbers following
the recent opening of the capital market.
"That would mean a phenomenal increase in turnover and also
quick and transparent transactions," he said. "The benefits will
go to investors, issuing firms, brokers and the entire capital
market."
The depository would also upgrade the domestic stock exchanges
to global standards. A new National Stock Exchange, the country's
first fully computerized multi-location bourse, is due to start
operations this month.
Trading is now largely manual on India's 22 stock exchanges,
sparking complaints of delays, inefficiency and mistakes.
Share transactions, in particular, are cumbersome and time-
consuming.
The Bombay Stock Exchange, the oldest and largest bourse, is
putting in place a multi-million dollar computerized system to
streamline operations and cope with increased cash inflows.
Indian capital markets raised 150 million dollars in fiscal
1985-86 but the figure increased to six billion dollars in 1992-
93. Estimates for last year run to between eight and nine billion
dollars.
The SHCIL was formed in 1988 by seven major state-owned
financial institutions. It now has custody of more than 15
million securities across the country.