SEBI directs depositories to constitute a committee to facilitate the reversal of erroneous transfers in demat accounts

SEBI on August 08, 2023, considering the challenges involved and in order to facilitate the reversal of erroneous transfers, has decided that a well-balanced and operational mechanism for exemption from OTP may be provided for 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 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 for reversal. The committee shall examine such erroneous transfers and provide an opportunity of hearing to both the 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.