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Karvy incident puts credibility of broking community at risk: Prakarsh Gagdani, 5Paisa

Sebi steps to ensure that only the serious players will continue in the business.

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Last Updated: Nov 25, 2019, 10.11 AM IST|Original: Nov 25, 2019, 10.11 AM IST
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Prakarsh Gagdani, 5Paisa-1200
Regulator has taken various steps to ensure that people’s funds and securities are absolutely safe and customers get weekly and monthly reports. There are a lot of back-end regulations that they have put on brokers, says Prakarsh Gagdani, CEO, 5Paisa. Excerpts from an interview with ETNOW.

What do you think of the Karvy case? They have 2.5 lakh customers. It is one of the largest brokers in the country. What happens to those clients from whose accounts the shares were siphoned off?
This is an unfortunate incident but it is more of an isolated one. The biggest implication is that it puts a lot of risk on the credibility of the broking community as a whole when it comes out in the media that one of the brokers is banned by Sebi.

On an overall basis, a good step has been taken by the regulator. The regulators are extremely active and are taking actions against some brokers and in the process, making the entire capital market very safe. As far as the customers of the existing brokers are concerned, we will see how the entire thing turned out to be, but the steps that the regulators are taking are in the right direction to ensure that overall the capital market is safe.

Last month, regulators took various steps to ensure that people’s funds, securities are absolutely safe and customers get weekly and monthly reports. There are a lot of back-end regulations that they have put on brokers. Overall, it is a step in the right direction and will ensure that only the serious players will continue in the business.

Do clients have an option to give brokers power of attorney so that the shares in the demat accounts could be moved? How large is this in the system?
Predominantly, that is how the broking industry operates mostly. Immediately after the purchase of the shares, these are transferred to the demat account of a customer but for smooth movement of shares when a customer sells. So, from a customer perspective, it is really very good because it is very seamless. Otherwise, every time you sell, you have to physically sign the instructions’ slip and give it to your broker.

In today’s digital era, it is very time consuming and problematic. From a customer standpoint, it is extremely easy and seamless that he can transfer his shares from the demat account to the broker account. But there are also some disadvantages.
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