The Securities and Exchange Board of India (SEBI) on August 08, 2023, issued a circular regarding the Facility to remedy erroneous transfers in Demat accounts.
The SEBI has received representations from depositories regarding the challenges being faced with regard to obtaining OTP in case of reversal of erroneous transfers in the Demat accounts and was requested to address the issue.
Considering the challenges involved and in order to facilitate the reversal of erroneous transfers, it is decided that a well-balanced and operational mechanism for exemption from OTP may be provided for the reversal of such erroneous transfers in the Demat accounts.
For this purpose, Depositories shall constitute an internal and a joint committee for examining the intra-depository and inter-depository erroneous transfers respectively. Such committee shall be headed by a Public Interest Director of the Depository and have a minimum of 3 members including the head. The depositories shall place before the committee all such instances of erroneous transfers pending reversal.
The committee shall examine such erroneous transfers and provide an opportunity for a hearing to both parties in the interest of principles of natural justice. The committee shall, based on the documentary evidence and the hearing, take a decision on the basis of reasons to be recorded in writing.
Depositories shall subsequently act based on the decision of the committee and shall send an email to the registered email ID of the transferee, informing about the decision of the committee.
[Circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/139]
