ET View: Data held in demat accounts should be secure too

The government’s plan to make it compulsory for unlisted companies to de-materialise their shares to track down fraudulent shell companies and their promoters makes eminent sense.

Paper shares of ownership records is an 18th century practice that should be dispensed with. Audit trails will get created when paper shares of unlisted companies are converted into an electronic form, helping the government's crack-down against tax evasion and money laundering.

To trace the real beneficial ownership, India must also adopt a unique legal identifier for all persons and legal entities, which include companies, charities and trusts. The RBI has already introduced the legal entity identifier, a global reference number that uniquely identifies every legal entity or structure that is party to a financial transaction in any jurisdiction. The intent is to improve the quality and accuracy of financial data systems for better risk management. Thats fine, but India, like the UK, must have a registry of the real owners in public domain, to enable investors know who they are dealing with here.


Data of shares held in the demat accounts should be safe and secure, given if someone wants to harm the economy, all she needs is to mess up with the data for assets. Cyber-attacks can devastate ownership records of India Inc in the 21st century. So, we need to use better technology, systems and safety protocols to protect data.