Bringing Software to Stop IPO Filing in the Name of Others
7 March 2021, Kathmandu
Himachal (Alias) has brought photocopies of the citizenship of his brothers, sisters, and friends in the village. In their name, he opened a demat account and a broker account.
The purpose of opening a demat account was to fill the IPO in everyone’s name and to take advantage of sales in the secondary market.
A lot of people like Himachal are now cultivating IPOs. One individual filed IPO on behalf of 50-60 individuals. An IPO is needed to fill out a demat account. You may apply for an IPO from home online.
Purna Prasad Acharya, CEO of CDS & Clearing, said there are several complaints that others have opened demat accounts on their own name and paid for IPOs.
“There are thousands of such complaints, in particular those found to have been abused by their own relatives by opening a demat account. Things are not going to court. Therefore, action cannot be taken,” Acharya said.
If the offended person files a lawsuit and goes through the court process, the individual running the demat account on behalf of others will be punished for a banking offence.
Acharya said that the institution opening the demat account (DP) had been instructed to open the account only after the individual had been present.
Following the course of CDSC, many DPs have begun to open demat accounts only in the presence of individuals. However, the DP does not have the power to say whether or not the person who came to open the account with a photocopy of citizenship is the same.
A provision is made for the renewal of demat accounts every year. There is no requirement to be present for renewal; there is also an arrangement to be renewed by paying the charge electronically.
IPO growers have been a little surprised lately. The number of account openers currently stands at 3 million 41 thousand, but the number of people filling the IPO is just 1.5 million on average. This means that several demat accounts that have already been opened are now inactive.
More than two such accounts cannot be opened by an individual. According to the CDSC, only 170,000 people opened two accounts.
Complaints to the CDSC indicate that there are still a lot of IPO cultivators. Now, CDSC is operating in such a way that it cannot cultivate IPO by opening a demat account on behalf of others, said CEO Acharya.
Now that a demat account is being opened, DP is creating a separate program to fill in the information of its customers.
“We’re going through the bidding process by preparing the requirements required for software development,” Acharya said.
Once the requirement is ready, the DPs will be connected to the CDSC. He said that once centralized KYC details are available; there would be no difficulty in filling KYC forms again and again.
He also said that the device is ready to use artificial intelligence to detect whether the person’s citizenship photo and the individual present are the same.
“A demat account cannot be opened if the photo of the citizen and the individual present are not the same,” Acharya said. Not only that, but also by the same arrangement, the renewal of all the demat accounts opened earlier will be carried out.
If the computer shows that the photo of the citizen and the person opening the demat account are not the same, the demat account of that person will not be renewed. This means that the demat account will be renewed only after the individual has been identified.
“Even those who currently have a demat account will be upgraded to the new framework. It would not be able to fill out the IPO in the name of anyone, “He said that. Acharya said that CDSC is working on its complete implementation in one year.
