Sebi Warns NSDL Over Compliance and Cyber Alert Lapses

Sebi has issued warning letters to NSDL for lapses in demat account visibility and cyber alert tracking. NSDL has clarified that there is no financial or operational impact resulting from the warning letters. The regulator has urged the depository to exercise greater care in future, strengthen internal control systems, and improve compliance standards to avoid recurrence of such instances. Failure to comply with Sebi guidelines may lead to stricter actions.

The National Securities Depository Limited (NSDL) is poised to launch its Initial Public Offering (IPO) later this year, following a series of regulatory developments. NSDL, a pioneer in the dematerialisation of securities in Indian capital markets, has been a key player in the financial infrastructure sector. The company has filed an addendum to its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), reducing the IPO size from 57.26 million shares to 50.15 million shares [1].

NSDL's core business involves providing electronic infrastructure for the dematerialisation of securities and facilitating the electronic settlement of trades. Over the past three financial years, the company's total revenue has surged, with depository services contributing significantly to its revenue [1]. The company has consistently rewarded investors with a dividend payout ratio ranging from 7.26% to 9.4% over the past three years [1].

The IPO is expected to attract significant interest, given the company's market position and financial performance. NSDL has a higher market share compared to Central Depository Services (CDSL) in terms of the number of issuers, active instruments, and value of assets held under custody. However, CDSL has a larger number of demat accounts and depository participants (DPs) [1].

Key shareholders, including IDBI Bank and the National Stock Exchange of India, are planning to sell their stakes in the IPO. IDBI Bank, the largest shareholder, will offload up to 22.22 million equity shares, while the NSE will sell up to 18 million shares [1].

Recently, SEBI has issued warning letters to NSDL for lapses in demat account visibility and cyber alert tracking. NSDL has clarified that there is no financial or operational impact resulting from these warning letters. The regulator has urged the depository to exercise greater care, strengthen internal control systems, and improve compliance standards to avoid recurrence of such instances. Failure to comply with SEBI guidelines may lead to stricter actions [1].

References:
[1] https://www.financialexpress.com/market/ipo-news-nsdl-ipo-launch-soon-know-nsdl-ipo-gmp-expectation-dhrp-key-highlights-all-details-here-3867244/