Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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The NSDL campaign

Posted by Muthu on March 22, 2011

NSDL (National Securities Depository Ltd.) has issued an advertisement today in a business newspaper asking us to be smart and hold mutual fund units in demat.

I’m getting an impression that there is an orchestrated effort (by whom, I don’t know) to monetarily benefit mainly depositories (NSDL is a depository), stock brokers and stock exchanges at the expense of investors and other channels.

I would be glad if I’m wrong. May be I’m a paranoid!

Gone are the days when mutual funds issued unit certificates.

Why not highlight the fact that mutual fund units are already in demat form. Why saying that you can demat something which is in anyhow in demat form?

So the concept of demating mutual funds is totally irrelevant.

This is like asking you to demat the account statement you get (if you hold shares) from your Demat account every quarter. Why they cannot think about ‘demat’ing this demat statement? Then you will get a statement for ‘demated demat’ account, which may needs to be demated again. The chain would go on. Confusing? For me too!

The same old sales pitch of consolidation. SEBI has recently mentioned that CAS (Consolidated Account Statement) would be soon made available to all investors. Like you are getting your account statements through email (monthly) and physical (quarterly), the mode and frequency of CAS would be advised by SEBI.

To obtain Consolidated account statement, even now, if you want, you can visit www.camsonline.com – Online services for Investors- Mailback Services- Consolidated Account Statement –CAMS+Karvy+FTAMIL – to obtain what NSDL is promising as you would get by demating the demated units.

Unlike demat, this comes at zero cost.

Also many advisors like us have the ability to provide consolidation of your holdings at the click of a button from our own software.

NSDL is saying you can view the valuation online.

To my understanding, in NSDL DP sites, you can see only the number of units and current value.

Whereas the reports I mentioned above is very detailed.

I think the impression is created in investors mind that online and demat are one and  the same. It is different. For example, you may create your own portfolio online free of cost in many personal finance portals. This is in addition what CAMS or your advisor provide you (as mentioned above).

If you ask my honest opinion, seeing the valuation of one’s investments (whether it is shares or mutual funds) constantly is a disease. This disease many a times totally ruins your financial health. Unless you are a trader, you do not need to constantly know value of your investments.

If you are a trader and not an investor, we would not be having professional relationship in the first place.

About other aspects mentioned in NSDSL advt., I think I’ve covered everything in my last post on Sunday (https://wisewealthadvisors.com/2011/03/20/%e2%80%98demat%e2%80%99ing-the-demat/ ). Instead of highlighting only advantages, if they highlight disadvantages the advertisement needs to be many times in size (like the blog I wrote on Sunday).

Mutual funds, a core product to be in an investor’s portfolio, have hardly penetrated. Probably there may not be more than 10 million investors in a country of 1150 million.

I hope regulatory authorities take a cue from LIC for making a product or concept reach across length and breadth of the country.

Even among mutual fund houses, UTI has better penetration across the country as their model is similar to that of LIC.

The stock exchange, stock broker and depository model have hardly made any inroads. You may read what Sucheta Dalal wrote about this in Moneylife last year. Mind boggling data and analysis.

It is better to follow a model which has succeeded in a country like India than a failed one.

Interestingly the SEBI (which controls mutual funds) chairman whose term ended recently was heading NSDL for over a decade before taking the position as SEBI chief.

Also I read yesterday an article written by Sucheta Dalal about NSDL in Moneylife, which has very many details I was not previously aware of.

You may click the below link to know more

NSDL behind regulatory fog:

http://www.moneylife.in/article/nsdl-behind-regulatory-fog/14893.html

One Response to “The NSDL campaign”

  1. K.Gopalan said

    It should be clear to anyone with some familiarity with trade and commerce that only a tradable security like a share can be held in demat form for the obvious advantages of safety etc.

    A MF statement can not be equated with a share certificate and,therefore,for this very reason is not fit for dematting.How can a mere statement which is not a negotiable security for consideration be ever traded across a stock exchange or its counterpart, if there be one,passes one’s understanding.Already MF units are in demat form and they can not further be dematted just to benefit a depository with some undeserved revenue. This is plain stupidity,to say the least and utterly misleading.

    Whoever is behind this speciously orchestrated revenue augmenting exercise for NSDL or its ilk with the apparent blessings of SEBI, is guilty of disinformation, disservice and self-serving delusions banking on the credulity and ignorance of vast uninformed investors in MF.

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