NSDL slams Sebi on demat racket

New Delhi: National Securities Depository Limited (NSDL) has objected Sebi's order on the demat racket.

According to NSDL, the order does not follow principles of natural justice. NSDL has also said that it has not been given an opportunity of a hearing, before the order was passed.

NSDL has mentioned that it is not a self-regulatory organisation and it is not Sebi-registered.

Sebi's observations are not backed by facts or law, said NSDL.

In a letter to Sebi, NSDL has said, "The order has been passed against NSDL, without following the principles of natural justice and without giving NSDL material and documents, which Sebi seeks to rely on. The order suffers from grave legal defects."

In some other bits of the letter, NSDL has pointed out that Sebi's observations are not supported by either fact or law.

It has also stated that NSDL is not an organisation of intermediaries and that NSDL is not registered with Sebi as an SRO.

It emphasised that Sebi has committed a grave error in arriving at that conclusion.

Earlier, Sebi said that it was a matter of concern that NSDL, which is a self regulatory organisation and within whose regulatory domain, Karvy DP falls; could not detect the apparently systemic deficiencies in Karvy DP, in advance.

In reference to Sebi's statement, NSDL said that it is not a requirement of Sebi's SRO regulations that systemic deficiencies should be detected in advance by SROs.

Some of the other factors that NSDL has asked Sebi to look into include rectifying of legal problems and giving it a hearing before passing an order.

NSDL has also asked Sebi for all documents and material that Sebi relied on, before passing this order on December 15.

This order revealed that two entities were running almost 8000 demat accounts.

So far, no comment has been received from Sebi on the issue.