Over the last three weeks, mutual fund investors have been fuming at the creation of a new identification number, which has been mandated, in addition to the Permanent Account Number (PAN) card of the Income Tax Department. If you are one of those investors who has complied with all the formalities, you expect a system that makes no mistakes about accounting for and crediting the shares that you have bought or sold into your twice-verified depository (DP) account.

Well, read about the experience of Madhav Parekh a regular retail investor. Many would say Parekh is a lucky person. On December 2, 2006, this Mumbai resident received his routine DP statement from the Stock Holding Corporation of India Ltd (SHCIL) and was surprised to find a credit of 20 shares of Parasvnath Developers, although he had never applied to its Initial Public Offering (IPO).

A little later, there was another surprise — a refund letter from Parasvnath Developers informing him of the electronic credit of Rs 12,000 through UTI Bank to his bank account. The letter, a copy of which is available with us, shows an ostensible payment of Rs 18,000 by Parekh, an allotment of 20 shares and a refund of Rs 12,000.

Parekh’s bank account however showed no such credit. Since then he has written several letters to the registrar and the company pointing out that he has neither applied for the shares, nor received any credit of Rs 12,000, as claimed.

If that were not bad enough, the refund intimation letter is addressed to “Kamlesh Parekh”, while the address, demat account and bank account details belong to Madhav Parekh. His DP account however does show a credit of 20 shares. The registrar in this case is Intime Spectrum and the depository is National Securities Depository (NSDL).

... contd.