The government has finally ordered an investigation into Stock Holding Corporation of India (SHCIL), India’s largest Depository Participant (DP) for a series of shenanigans documented by The Indian Express over the last few weeks.

SHCIL was originally set up as a potential Central Depository of shares and over 83 per cent of its shares are held by government-owned banks and insurance companies including SUTI, ICICI, IDBI, IFCI, GIC and LIC. For many years now, SHCIL has been attempting to diversify into capital market related business, often with disastrous results. In the Ketan Parekh scam of 2000, its MD was arrested and five senior employees were charge-sheeted for dubious lending to a Kolkata broker connected with the DSQ Software Group. Yet, the institution (because of the composition of its shareholding) was unaffected and allowed to carry-on without any serious reorganisation or restructuring and many charge-sheeted employees remain at its helm.

Recently, SHCIL bid for the role of Central Record-Keeping Agency for the automation project of stamp duty operations. In 2005 it had bagged the prestigious project and since then has embarked on a series of dubious dealings and spawned several secret subsidiaries. Ironically, it is the massive fake revenue stamp scandal (Telgi scam) that led to the decision to issue electronic revenue stamps.

In just over a year, SHCIL (as reported earlier) first sold off 76 per cent of the equity in its subsidiary SHCIL Services Ltd (SSL) to a clutch of private individuals and foreigners, without informing its shareholders or board of directors. It also created four domestic subsidiaries, with strange private partners and in another clandestine move, set up a subsidiary in Singapore called Unitech Value Solutions Pvt Ltd. More about that later.

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