A

Project Report
ON

Investors Protection in India

Submitted in partial fulfillment of the Requirement
for award of the Degree of Master of Business
Administration (MBA)
March, 2011

Under the supervision of SUBMITTED BY

Mrs. ANAND GUPTA ADITYGUPTA
Lecturer in K.A.I.M. MBA 4th Semester

Roll No. 9002

KEDARNATH AGGARWAL INSTITUTE OF

MANAGEMENT, CHARKHI DADRI

(Affiliated to Maharishi Dayanand University, Rohtak)

 PREFACE

To develop managerial and administrative skill, project has a significance role play in the
subject of business. It is necessary that we should combine our classroom learning with the
knowledge of real business environment.
Project work is conducted as an integral part of the management course as it provides an
opportunity to apply the theoretical aspect in practical. It gives on excellent opportunity to a
student to apply his ability, capability, intellect, knowledge, brief reasoning and mantle
ability by giving a solution to the assigned problem, which reflects his caliber.

I have done my project on “Investor protection in India”

(ADITY GUPTA)
 ACKNOWLEDGEMENT

One of the most pleasant parts of writing a report is the opportunity to thank those who have
contributed to the successful completion of it. Unfortunately, the list of expressions of
thanks, no matter how extensive, is always incomplete and inadequate. These
acknowledgments are no exception to it.

In the accomplishment of a task with desired effects, co-operation, assistance guidance & all
motivation were must while com of plating my project. I enjoyed all these from all who were
assistance with the field directly or indirectly. So, it becomes my prime duty to thank all
those who showed me the way & helped me in completing my project especially whole time
to time helped me a lot.

I wish to acknowledge the support, assistance and co-operation given to me by the personnel
at KAIM, Ch.Dadri. Words are not sufficient to express my gratitude towards my project
guide Mr. Anand Gupta, without whose help & Constant scholarly guidance this project
could have not been successful. I also wish to thanks to Prof. L.N. Dahiya (Director,
KAIM), Mrs. Supriya Dhillion (Add. Director, KAIM) & Mr. Sachin Suhag (TPO,
KAIM) fort their co-operation & help.

(ADITY GUPTA)
 Contents
1. Significance of the study

2. Review of existing literature

3. Conceptualization

Industry profile

Company profile

Introduction of the topic

4. Focus of the problem

5. Objective of the study

6. Research methodology

Research design

Sample design

Collection of data

Analysis of data

7. Limitations of the study

8. Organization of study

9. Suggestion and conclusion

10. References
Introduction
Investor protection is as important an issue in India today as it was in 1980s and 1990s but
the whole complexion of the problem has changed.
The structure as well as the functioning of the Indian securities market has been transformed
beyond recognition since the 1990s. The profile of the investing public, the investment
choices available, the market environment and the nature of problems bothering the investors
are substantially different today from what they were 10-20 years ago.
The Ministry of Company Affairs had sponsored this massive study under the Investor
Education and Protection Fund (IEPF) with the object of creating a deeper understanding of
the ordinary investors’ concerns, problems and needs.
The first five months of the calendar year has seen a total addition of 7.52 lakh new investor
accounts by the country’ two depositories, taking the total numbers of investor accounts to
above 75 lakh, according to the data available with the depositaries.

Introduction of Investor:
An investor in securities is people who identify himself with the national economy. One
who invests in the growth of economy? One who risks a portion of savings, and invests in
those sectors, which are likely to grow in tandem with the economy or faster than that.
An investor in securities can their fire be defined as a person who invests his invisible
surplus in securities, with the following objectives:
o To contribute his savings to the productive sectors of economy;
o To help entrepreneurs in successful implementation of projects undertaken by them,
by providing risk capital;
o To earn a sustained stream of returns on successful implementation of the projects;
o To obtain capital appreciation over a period of time.
An investor is interested in true value of the enterprise, unlike speculator, dealer & jobbers
who are primarily interested in periodic movement in the market price of securities.
For making investment, investor needs:
 Sufficient avenues for investment
 Adequate information to analyze the relative strength of various enterprise;
  A well regulated intermediary network that facilities easy entry &exit from an
investment;
 Access to information about the regulatory framework and market mechanism
 Strict monitoring mechanism for immediate checking of errant players; & efficient
redressal system for his grievances.

Types of investors
The growth in the numbers of investors in India was encouraging. The trends revealed that in
addition to FIIs and Institutional Investors, small investors were also gradually beginning to
regain the confidence in the capital markets that had been shaken consequent to the stock
market scams during the past decade. It is imperative for the healthy growth of the corporate
sector that this confidence is maintained.
The concept of investor protection has to be looked at from different angles taking into
account the requirements of various kinds of investors i.e. (i) investors in equity (ii) large
institutional investors (iii) Foreign Investors (iv) investors in debentures and (v) small
investors/deposit holders etc.
1.)Individual investor :An individual who purchases small amounts of securities for
him/herself, as opposed to an institutional investor. Also called retail investor or small
investor.
2)Institutional investor: Entity with large amounts to invest, such as investment companies,
mutual funds, brokerages, insurance companies, pension funds, investment banks and
endowment funds. Institutional investors are covered by fewer protective regulations
because it is assumed that they are more knowledgeable and better able to protect
themselves. They account for a majority of overall volume.
3) Founder Capital and Love Money investors: These sources include money in the bank,
certificates of deposit, shares and bonds, cash value in insurance policies, real estate, and
home equity and pension funds. Love money investors are your family and friends. If you
borrow from relatives and friends, make sure to spell out clearly the terms of the funding
agreement (including the date, amount of the loan, interest rate, repayment schedule,
collateral, signatures) to avoid future problems and disagreements.
4) Angel Investors: In general, angel investors are wealthy people, such as retired
entrepreneurs and executives, who want not only to invest money but also to contribute their
valuable business experience. Others are wealthy professionals, such as doctors or lawyers,
who prefer to take a passive role in a business.

Angel investors are hard to find because they don't advertise their willingness to invest.
You'll typically need a referral from a financial advisor or other professional who has
established contacts with these individuals. Angel investors will invest between $25,000 to
$250,000 in small and medium-sized businesses. Generally they provide equity financing
and look for a return on their investment of about 30%.

5) Corporate and Institutional Investors:

Corporate Strategic Investors (e.g. major firms looking for partnerships).

Institutional investors include subsidiaries of commercial banks, investment banks, life

insurance companies and pension funds. Canada has a wide range of such organizations
including Bank of Montreal Capital, Royal Bank Capital Corporation, CIBC Wood Gundy
Capital, Penfund Partners, Investissement Desjardins, Roynat, Ontario Teachers' Pension
Fund, OMERS and TD Capital. Institutional investors provide equity and subordinated debt
financing to small and medium-sized businesses. These organizations fund investments that
are less than $1 million, as well as larger ones.
6) Government-Backed Corporations: Government-backed corporations, such as the
Community Futures Development Corporations, often provide equity financing in
small communities where there are few mainstream investors. The Atlantic Canada
Opportunities Agency supports businesses in the Atlantic Provinces. The Business
Development Bank of Canada (BDC), on the other hand, operates across Canada;
BDC provides not only financing but also counseling, training and mentoring
assistance.
7) Corporate Strategic Investors: Corporate strategic investors provide equity to small
and medium-sized businesses. They differ from traditional venture capital firms in that
their motivation extends beyond immediate financial reasons. Their business
agreements are also referred to as "strategic alliances" or "corporate partnerships."
Strategic investors have a wide range of objectives: to enhance innovation, to gain
exposure to new markets and technologies, to find acquisition candidates, to assure
sources of supply, to help a client, to initiate new ventures internally, and to spin off
businesses that aren't appropriate for in-house purposes.
8) Conservative investor: Their major goal is to preserve their capital. They want to earn
some income but because their timeframe to invest is short (2 years), they want to take
few risks. Their portfolio is likely to be made up of cash and fixed interest investments
with no investments in shares and property. The biggest risk they face is that their
investments may not keep pace with inflation.
9) Moderate investor: They want to benefit from holding some growth investments but will
only accept an “outside chance” that their capital could reduce in the short-term. Their
investment timeframe is under 5 years. Their portfolio may have 35-40% invested in
property and shares.
10) Moderately aggressive investor: They are investing for a longer-term (5-10 years) and
want to spread their investments over all the asset classes. They want both income and
growth and accept that there may be periods where their portfolio “goes backwards”.
In the longer-term they expect to do better than Moderate investors. Their portfolio
may have 70-75% invested in property and shares.
11) Aggressive investor: They want to focus almost entirely on growth assets and all of
their investments will be in shares and property. They accept that in the short-term
their portfolio may do worse than cash returns and the capital they have invested may
reduce. However, as long-term investors (10 years and longer) they are confident that
shares and property will outperform all other asset classes.

Investor protection

The basic objectives of regulatory body with body with reference to the investors of the
securities are protection of the interest of the investors and education of investors. As far as
the first objective and the steps taken by the regulatory body is concerned, there is doubt that
in the shortest span the regulatory body has taken important steps to discipline the market
intermediaries and other market participants. The steps are taken this regard by regulatory
body could not fully protect the interest of the investors of the securities it might be due to
the fact that the different authorizes are vested with the statutory powers to regulate different
functions aspects of activates relating to the capital market.
As far as education of investors is concerned, there is no doubt that regulatory body has
taken effective steps toward education of investors, making available the activities to the
capital market to investing public and also guiding the investors through various investor
guidance and active participation by the investor’s associations. The future programs of
regulatory body seem to be encouraging various statutory organizations and the training of
the intermediaries to pave the way for adequate investor’s protections.
Three things need to be done to enhance the investor’s confidence in the market
mechanism and protect his interest:
• Make investor aware and educated enough to understand technical, regulatory
and producural aspects of the investments.
• Make necessary information available to the investor in a manner he
understand it, so that he can take informed investment decisions.
• Frame and implement regulations in a Manner that the chances of
malpractices and reduced to minimum
Also, the investor should himself also observe the following while investing:
o Obtain written documents regarding investing
 o Read and understand such documents
o Find out the costs and benefits associated with the invested
o Assess risk-return profile of the investment
o Know the liquidity and safety aspects of the investment
o Deal only through a sebi registered intermediary
o Explore alternative options in case something goes wrong with the
investment.
There are various investment choices to the investors in the market. They are:
Equity shares:
o Equity shares are primarily volatile instruments
o They yield returns in terms of dividends and equity shares depends upon the
trading volume o the share.
o Company ‘s performance should be monitored closely to track the investor’s
performance.
o It is possible to buy even a single share in dematerialized mode.
Bonds
A bond is a loan given by the buyer to the issuer of the instrument. These are dept
instruments. Over and above the scheduled interest payments as and when
applicable, the holder of a bond is entitled to receive the par face value of the
instrument at the specified maturity date.
Debentures
Debentures are also dept instruments:
o Dept instrument are required to be rated by created rating agencies.
o Investor should track the rating of the same.
Mutual funds

o Professionally managed
o Provides diversification of portfolio
o Liquidity
o Transparency
o Choice of securities
o Regulated by sebi
Evaluation of investment choices
An investor should keep in mind various investment choices available to him along with the
risk and returns associated with each one of them and evaluate the securities on the
followings criteria:
o Liquidity
o Safety
o Returns
o Tax savings
o Whether active involvement of investor is required to manage the investment
o Minimum amount that can be invested.
The investor should consider following factor before making investment in securities:
o Whether there is a regulatory framework in place in respect of the securities
o Whether the offer of the security is in compliance with the due process of law
o Whether the transaction has any counter party risk
o Whether the security can be liquidated into cash easily
o Whether the security will generate returns compatible with its risk.
o Whether the security fits into your investment portfolio and meets your investment
goals.

Rights of investor
o To receive document regarding your investment
o To demand certificate of registration of concerned intermediary
o To receive the security corporate benefits i.e. dividends, rights, bonus,
interest /redemption etc.
o To participate and vote in general meetings
o To receive annual reports etc.
o To apply for winding up of a company, if need be, etc.

Rights of a shareholder as an investor:

As a shareholder in a company, one enjoys certain rights, which are as follows:
 o To receive share certificates, on allotment or transfer as the case may be, in
due time.
o To receive copies of the abridged annual report, the balance sheet, the profit
&loss account and auditors reports.
o To receive dividends in due time once they are approved in general meetings.
o To get corporate benefits such as rights and bonus share, once they are
approved
o To apply to the company law board to call or direct the annual general
meeting.
o To inspect the minutes book of the general meetings receive copies thereof
o To proceed against the company and
o To receive the residual proceeds.

A debentures holder has the following rights:

o To receive interest/redemption in due time
o To receive a copy of the trust deed on request.
o To apply for winding up of a company, if it fails to pay its dept.
o To approach the debenture trustee with any grievances.13

Investor’s responsibility
It is important for the investor to understand that if he has so many rights as a
shareholder in the company, he has also certain responsibility to discharge and they
are:
o To remain informed
o To be vigilant
o To participate and vote in general meetings
o To exercise his rights in his own or as a group
o To pay/deliver securities as and when called upon to do so.

Safeguard for investors:

These are some of the safeguards that need to adhere to by the investors before trading in
the securities market.
o While selecting the broker /sub broker
Deal with only sebi resisted broker /sub-broker after due diligence. Details of list of
brokers can be procured from the member ‘list published by the exchange and from
the web site www.bseindia.com&wwwnseindia.com
o Enter into an agreement
1. Fill in a client registration from with broker/sub broker
2. Enter into broker/sub /broker client agreement. This agreement is mandatory
from all the investors for registering as a client of a BSE trading member.
The client should ensure the following before entering into an agreement:
1. Carefully read to understand the terms and conditions of the agreement, before
executing the same on a valid stamp paper of the requisite value.
2. Agreement has to be signed on all the pages by the clients and the member or
they’re repressive who has the authority to sign the agreement. Agreement has to
be signed by the witnesses by giving their names and addresses.
o While transacting
1. Specify to the broker/sub broker, the exchange through which your trade is to
be executed and maintained separate account per exchange.
2. Obtain a valid contract note (from broker)/confirmation memo (from sub
broker) within 24 hours of the execution of the trade. Contract note is a
confirmation of trade done on a particular day for and on behalf of a client in a
format prescribed by the exchange. It establishes a legally enforceable
relationship between the member and client in respect of settlement of trades
executed on the exchange as stated in the contract note.
Contract note are made in duplicate, and the member and clients both keep one
copy each. The client/s are expected to sign on the duplicate copy of the note
For having received the original.
1. Contract note form A contract note issued where member is acting for constituents as
brokers and agents
2. Contract note form B contract note issued by members dealing with constituents as
principles
 3. Contract note form C confirmation memo issued by registered sub brokers acting for
clients/constituents as sub brokers
Ensure that the contract note/confirmation memo contains:
1. Sebi registration number of the member /sub broker:
2. Details of trade such as order no., trade no., trade time quantity, price brokerage,
settlement number, and details of other levies
3. The trade price should be shown separately from the brokerage charged. The
maximum brokerage that can be charged is Rs 0.25 per share/debenture or 2.5% of
the contract price share /debenture whichever is higher. This maximum brokerage is
inclusive of the brokerage charged by the sub broker (sub-brokerage cannot exceed
1.5% of the trade value) .any additional charges that the member can charge are
service tax @12.5 % as may be applicable) of the brokerage, stamp duty, etc.
4. The brokerage and service tax are required to be indicated separately in the contract
note.
5. Signature of authorized representative
6. Arbitration clause stating that the trade subject to the jurisdiction of Mumbai must be
present on the face of the contract note.16
Ensuring settlement
 Ensure delivery of securities/payment of money to the broker immediately upon getting
the contract note for sale /purchase but in any case, before the prescribed pay –in day.
 The member should pay the money or securities to the investor within 24 hours of the
payout.
 Open Demat account.
 For delivery of shares from Demat a/c, give the depository participant (DP)’delivery out”
instructions to transfer the same from the beneficiary account to pool account of broker
through whom shares and securities have been sold.

The following details to be given to the DP:

Details of the pool a/c of whom the shares are to be transfer, details of script, quantity etc. as
per the requirement of depositories, the delivery out instruction should be given at least 48
hours prior to the cut –off time for the prescribed securities pay in.
1. For receiving shares in your Demat a/c, give the depositary participant “delivery in”
instruction to accept shares in beneficiary accounts from the pool account of broker
through whom shares have been purchased.
2. If physical deliveries are received check the deliveries as per good/bad delivery
guidelines issued by SEBI.
3. Bad delivery cases should be sorted out through exchange machinery immediately
4. The investor should tally the account with the member at least once in 6 months.
5. The investor may verify their trades done on BSE through trade confirmation system at
www.bseindia.com if they have a contract note for the concerned trade.
6. All registration of shares for ownership of physical shares should be executed by a valid,
duly completed and stamped transfer deed.17

INVESTOR – RIGHTS AND OBLIGATIONS

Investor Rights Investor Obligations

The right to get
• The best price
• Proof of price/brokerage charged
• Your money/shares on time
• Shares through auction where
delivery is not received
• Square up amount where delivery
not received in auction
• Statement of Accounts from trading
member
The right for redressal against
• Fraudulent price
• Unfair brokerage
• Delays in receipt of money or
shares
• Investor unfriendly companies
The obligation to
• Sign a proper Member-Constituent
Agreement
• Possess a valid contract or
purchase/sale note
• Deliver securities with valid
documents and proper signatures
The obligation to ensure
• To make payment on time
• To Deliver shares on time
• To send securities for transfer to the
company on time
• Forwarding all the papers received
from the company under objections
to the broker on time

Several avenues are available for investment. “Don’t put all your eggs in the
s a m e basket”. One has to choose different instruments as per his requirements, savings,
and age group. Youngsters can invest little more percentage of his savings in risky equity
instruments.
The person getting retirement compensation would like to go for safe, steady instrument,
giving regular income, cash inflow. He following Table is given showing some of the
available instruments along with its pros and cons.
 WHERE TO INVEST?

IMPORTANT FINANCIAL RATIOS:

Investors must understand various ratios, phrases used in Capital Market. To

understand the intrinsic value of the Company, it helps a lot. All business newspapers,
business magazines, give detail about “Stock Market Ratios” of each Company.
At the time of making decision about investment one must study, understand, these
ratios. Compare the ratios of that particular company with the industry, the
background of the company etc. An informed, studied investment is safe investment.
Prevention is best way of protection.

Financial Ratios

1.Book value per share = equity share capital + reserves

Total no. of equity shares
2.Cash Earning per share
 = Net Profit – Preference Dividend +Deprecation
No of Equity Shares

= Gross Profit-Tax
No of Equity Shares

3.Cash P/E = Days Closing Price

Cash Earning Per Share

4.COVER = Earning Per Shares (Eps)

Dividends Per Share

5.Current Ratio (%) = Total Current Assets*100

Total Current Liabilities

6.Earning Per Share (Eps) = Profit After Tax (Pat)-Preference Dividend

Total No. Of Equity Shares

7.Earnings Price Ratio (%)Or Earnings Yield =Earnings Per Share*100

Market Price Of the Share

8.Earnings To Equity (%)= Profit After Tax (PAT)-Preference Dividends

Equity Share Capital + Reserves

9.Pay Out Ratio= Dividend Per Share *100

Earnings Per Share

10.P/B V Ratio= Market Price Of Share

Book Value Of Share

11.P/E Ratio= Market Price Of The Share

Earning Per Share (Eps)
12. Pbt To Sales = Profit Before Tax (Pbt) 100
Net Sales

13.Quick Ratio= Current Assets-Inventories

Current Liabilities

STATUS OF INVESTORS’ GRIEVANCES/REDRESSAL SYSTEM

Process of solving investor’s grievances

BSE has established a full-fledged Investors’ Services Cell (ISC) to redress Investor’s
grievances. Since its establishment in 1986, the Cell has played a pivotal role in enhancing
and maintaining Investors’ faith and confidence by resolving their grievances either
against listed companies or against Members of the Exchange. The services offered by the
ISC are as under:

Investor’s grievances against Listed Companies:

ISC forwards the Complaints to the respective company and directs them to solve the
matter within 15 days. In spite of the above efforts, if the company fails to resolve the
Investor’s Complaints and the total no. Of pending complaints against the company
exceed 25 and if these complaints are pending for more than 45 days, after issue of show
cause notice for 7 days the Scrip of the company is suspended from trading till grievances
are resolved. ISC also transfer’s such Scrip’s to ‘Z’ category for non-resolution of Investor
Complaints.
ISC takes many other pro-active measures to resolve the Investor’s grievance such as:
Calling the Company representative to the Exchange to interact with Investor’s / Members
to resolve the complaints.

Calling major Registrar & Transfer agent to the Exchange to interact and resolve the
grievances of the Investor’s and Members of the Exchange.
Issuing monthly press release listing top 25 companies against whom maximum
complaints are pending for resolution. The same is also released on the website of the
Exchange.
Pursuing Mumbai based companies to depute their representative to the Exchange to take
the pending list of complaints & resolve the same immediately.

Investor’s grievances against Member’s

The nature of complaints received by the Exchange can be broadly classified into the
following categories:
• Non-receipt of delivery of shares/ Non removal of objection/Non-receipt of sale
proceeds of shares/ Non-receipt of dividend/ Non-receipt of Rights, Bonus shares
• Disputes regarding Rate Difference
• Disputes relating to non-settlement of Accounts
• Miscellaneous Items
The complaints are forwarded to the concerned members to reply /settle the complaints
within 7days from the receipt of the letter. If no reply is received or reply received is not
satisfactory, the matter is placed before the IGRC (Investor’s Grievance Redressal
Committee) headed by Retd. High court Judge. IGRC is constituted by the Governing
Board to resolve the Complaints of non-members against Members through the process of
reconciliation. The parties are heard and the matter is tried to be solved amicably or it is
referred for Arbitration under the Rules, Bye-laws & Regulations of the Exchange.

ARBITRATION
The Investors complaints referred by IGRC can be against the (i) active members of the
Exchange as well as the (ii) defaulter-members of the Exchange. The process of solving
the Investors complaints through the arbitration procedure are as mentioned below:

Arbitration Procedure
For the purpose of resolution of grievances between Investors and Member-brokers, the
Exchange has constituted an Arbitration Committee with the approval of SEBI.
The non-member arbitration panel consists of retired High Court and City Civil Court
judges, Chartered Accountants, Company Secretaries, Solicitors and other professionals
having in-depth knowledge of the capital market. On receiving the direction for arbitration
from the IGRC, the complainant (applicant) files relevant supporting documents for
arbitration. A set of the arbitration documents is sent to the other party (respondent) for
giving his counter reply. After completion of the formalities, the matter is fixed for
hearing before arbitrators. For claims less than Rs.10 lakhs, the applicant has/have to
propose the name of three arbitrators and the respondent(s) has/have to consent on the
name of one of the arbitrators. In case the respondent(s) does/do not consent on the
arbitrator, the exchange appoints the arbitrator to adjudicate the matter. For claims above
Rs.10 lakhs, a panel of three arbitrators, one each to be appointed by the applicant(s) and
respondent(s) and the presiding arbitrator has to be appointed by the exchange to
adjudicate the matter.The date for hearing is fixed and the concerned parties are informed
about the date through notices. After hearing both the parties and taking the submissions
and the documents on record, the arbitrator(s) close the reference and the award (decision)
is given

Appeal: If the applicant is not satisfied with the award he can appeal against the same in
the Exchange within 15 days of the receipt of the award. The appeal bench of five
arbitrators hears the matter and gives the award

However, the aggrieved party has to deposit the awarded amount given by the Arbitral
Tribunal with the Exchange unless and until the appeal bench exempts it partly or wholly.
If the award is in favor of the applicant, the active member has to abide by the decision. If
he fails to abide by the award, the Disciplinary Action Committee (DAC) takes necessary
action against him. The award becomes a decree after three months from the date on
which it is given and can be executed as a court decree through a competent court of
jurisdiction. The same can be challenged only in the High Court of Judicature, Mumbai.

Arbitration Procedure against Defaulter Member of the Exchange

Any complaint against defaulter Members of the Exchange can directly be filed in
arbitration. However the same has to be filed within 6 months from the date of declaring
the Member as defaulter by the Exchange. The rest of the process is the same as above.
An award obtained against a defaulter member is scrutinized by the Defaulters committee
(DC), a standing committee constituted by the Exchange, to ascertain their genuineness,
etc. The awarded amount or Rs.10 lakh whichever is lower is paid from the Customer’s
Protection Fund (CPF). After the approval of the DC & Trustee of CPF, the amount is
distributed to the clients who have obtained the award against defaulter member.
 Status Report Of Arbitration Matter

Investor’s or Customer’s Protection Fund

BSE is the first Exchange to have set up the 'Stock Exchange Customer’s Protection Fund
in the interest of the customer's of the defaulter members of the Exchange. This fund was
set up on 10th July 1986 and has been registered with the Charity Commissioner,
Government of Maharashtra as a Charitable Fund. BSE is the only Exchange in India,
which offers the highest compensation of Rs.10 lakhs in respect of the approved claims of
any Investor against the defaulter members of the Exchange.
The members at present contribute Rs.1.50 per Rs.10 lakhs of turnover. The Stock
Exchange contributes 2.5% of the listing fees collected by it. Also the entire interest
earned by the Exchange on 1% security deposit kept by with it by the companies making
public / rights issues is credited to the Fund.30
Trade Guarantee Fund
In order to introduce a system of guaranteeing settlement of trades and ensure that market
equilibrium is maintained in case of payment default by the Members the Trade Guarantee
Fund was constituted and it came into force with effect from May 12, 1997. The main
objectives of the fund are as given below:
 1. To guarantee settlement of bonafide transactions of members of the Exchange inter
se which form part of the Stock Exchange settlement system, so as to ensure timely
completion of settlements of contracts and thereby protect the interest of Investors
and the Members of the Exchange.
2. To inculcate confidence in the minds of secondary market participants generally
and global Investors’, particularly to attract larger number of domestic and
international players in the capital market.
3. To protect the interest of Investors’ and to promote the development of and
regulation of the secondary market.
The Defaulters’ Committee manages the Fund, which is a standing Committee constituted
by the Exchange, the constitution of which is approved by SEBI.

Investor Awareness & Education programme

Investor Awareness programs are being regularly conducted by BSE to educate the
investors and to create awareness among the Investors regarding the working of the capital
market and in particular the working of the Stock Exchanges. These programs have been
conducted in Gujarat, Kerela, Tamilnadu, Uttar Pradesh, Rajasthan, Punjab, and Haryana
and within Maharashtra.
The Investor Awareness program covers extensive topics like Instruments of Investment,
Portfolio approach, Mutual funds, Tax provisions, Trading, Clearing and Settlement,
Rolling Settlement, Investors' Protection Fund, Trade Guarantee Fund, Dematerialization
of shares, information on Debt Market, Investors’ Grievance Redressal system available
with SEBI, BSE & Company Law Board, information on Sensex and other Indices,
workshops and Information on Derivatives, Futures and Options etc.
The Bombay Stock Exchange has also earmarked an amount of Rs.1 crore for assistance
to Investor Associations for conducting Investor Awareness and education seminars etc.
During the year 2000 – 2001 an amount of Rs.20 lakhs has been disbursed to the SEBI
recognized Investors Association.
The Indian governmental authorities have recognized this problem by creating a special
fund, known as Investor Education and Protection Fund (IEPF) in the Department (now
Ministry) of Company Affairs. It is a laudable idea. In addition, the SEBI has also
launched its Investor Awareness Programme. All these attempts are rather sporadic and do
not seem to have made much impact so far. A more systematic approach to investor
education is needed.
The fast socio-economic changes in India, as in other countries, are increasingly forcing
people to provide for their own retirement during their working life.
Further, for the benefit of the Investors’ the Bombay Stock Exchange has:

1.BSE Training Institute which organizes Investor Education programs periodically on

various subjects like comprehensive program on Capital Markets, Fundamental Analysis,
Technical Analysis, Derivatives, Index Futures and Options, Debt Market etc. Further, for
the Derivatives market BSE also conducts the compulsory BCDE certification for
members and their dealers to impart basic minimum knowledge of the derivatives markets.
For any enquiries Contact: The Training Institute, 21st Floor, P.J.Tower, Dalal Street,
Mumbai- 400 001.
2.BSE's official Website www.bseindia.com which is the focal point for information
dissemination and updates Investors with the latest information on Stock Markets on a
daily basis through real time updating of statistical data on Market activity, corporate
information and results. Educative articles on various products and processes are also
available on the site.
Publications: BSE regularly comes out with publications for Investor education on
various products and processes like Quick reference guide for Investors.

Introduction And Information About Regulatory System

Investors feeling small, not able to have access, approach the Grievances
Redressal System of the Capital Market. India in post liberalization period has enacted
enough laws, made sufficient provisions, given full authority to all regulators. It is
SEBI, whom everything is given by the policy-makers, Parliament, which they were
requested, RBI has asked for both, an institution to draft monitoring policy and also
regulators for the banks and NBFCs. DCA also wanted both, wanted to become, remain
policy-makers, executive and also to have full power, authority as regulators.
Now the States enacts law. Now States are also acquiring powers, giving the powers and
authorities to the State Home Department, to the Collectorate, to the Revenue Ministry,
to the Police, enacting Investors’ Protection Act to control, regulate and punish the
finance scamsters, unorganized schemes, ‘‘Ek ka Double Schemes’’.
New regulators are entering in the arena. IRDA already established. New regulators for
Pension Funds, Commodity exchanges are being mooted. Pension Fund Ordinance
th
issued on 30 December 2004.
All the regulators, power, authorities, laws are made, enacted to “Protect Small
Investors”, but today the small investor feels helpless, hopeless and unsecured.
In the following paragraphs of the study the status of Small Investors’’ Grievances
Redressal System explained in detail. What is the system? How it can be
approached? How they are responding to the Small Investors’?
The “Small Investors’ Protection” is a new phenomenon. The need arisen only after and
due to the economic liberalization. Urgency felt with the opening of Capital
Market. The Small Investors’ Protection concept is the contribution of
Investors’ associations like IGF, CERC and of the media and journalist like Ms. Sucheta
Dalal. Of course in the developed economy like USA also there are activists,
organizations fighting for Small Investors’ Protection.
PETITION TO THE PARLIAMENT
Investors’ Grievances Forum had file a petition to Parliament on behalf of Small
Investors in early 2000. This was the first time the status of Small Investors, the
Small Investors’ Protection system, the status of grievances redressal in India was
brought to the notice of the highest policy making body in the country. The petition was
th
presented to the Lok Sabha on 10 March 2000. The Petition itself speaks the status of
Small Investors’ and redressal system in the country. The petitioners Shri Shailesh
Ghedia and Shri Bharat Kotecha, both office bearers of IGF had submitted the petition to
the Parliament. The text of the petition is:
THE PETITION
“We the undersigned petitioners are office bearers of the registered investors’ association
working in various parts of India. The Securities Exchange Board of India also
recognizes us, which is responsible for regulating and protecting the Small
Investors’ in the Capital Market. We are working to protect the Small Investors’
throughout India.”
The Capital Market and the number of Small Investors have increased rapidly during the
last one decade. The number of Small Investors’ was only thirty lakhs in the 1960s, &
it has gone up to 6.30 crores in the year 2000.Opening up of the Capital Market
through privatization, liberalization and globalization encouraged investors to
invest in the share bazaar, in equities and people invested the savings of their life
with the shares and equities of the various companies.
But while opening the Capital Markets, the concerned authorities, including the
Government, have not framed the rules to regulate the same. In India there is no
machinery to protect the Small Investors’. In the last several years several security scams
broke out in India, namely: -
1. Harshad Mehta Security Scam of 1992-93
2. Non-banking Financial Institutions (NBFCs) Scam
3. Plantation Companies Scam
4. Chain Investment Schemes Scams such as “‘Ek ka Double Schemes’” or “Double
your money” etc.
Losses Suffered By Small Investors
It is felt that more than 50,000 crores worth of savings of retired pensioners, women,
widows and people of the salaried class were either looted or locked up in these scams.
But there has been no action for the recovery of the money. Till today, none of the Small
Investors’ have got a Single paisa back. There has been no action against all these
unscrupulous scamsters. Justice delayed is justice denied.
We have used all the tools available under a democratic set up, that is, we have
approached the State as well as the Central Government, the SEBI, the Reserve Bank of
India, the Company Law Board, the Department of Company Affairs and the
Securities Exchanges, but nothing happened.
We, therefore, submit this petition before you and request you to urge upon the Ministry
of Finance and the Union Government to take action to protect the interest of the Small
Investors’ and also to come out with a time-bound action plan.”
 Small Investors’ are required to submit their grievances, complaints to different
agencies, and regulators as explained in the Chart/Table. Law maker have evolved
different Regulators for different financial instruments. Complaints about particular
financial instrument with correct Regulator, eg. complaint against the broker, sub-
broker can be filed with two different agencies, (i) Stock Exchange (ii) SEBI. If
the transaction is of secondary market, i.e. sale or purchase of shares from the
Stock Exchange, the concerned Stock Exchange is to be approached initially.
Stock Exchanges are having Investors’ Grievances Cell. In case of default by the
Broker, investment protection fund is made available to make payment to the
Small Investors’.
Maximum ceiling under Investor Protection Fund of BSE and NSE is Rs.10,00,000/-
per Small Investor. Stock Exchanges also have arbitration mechanism. If the
differences cannot be settled by the Department in the Department both the
concerned aggrieved parties are requested to approach arbitrator. BSE and NSE are
having very efficient scientific mechanism of arbitration.
One can go in appeal against arbitration decision to the Board of Stock Exchange or
has to approach SEBI. Now with the recent December 2004 amendment the Stock
Exchanges have been brought under the purview of SAT.

STATUS OF INVESTOR GRIEVANCES

FOR THE FORTNIGHT APRIL 1 TO APRIL 15, 2005

The grievance letters received by SEBI from investors have been categorised as under:

Type I: Non-receipt of refund orders/allotment letters etc.

Type II: Non-receipt of dividend.

Type III: Non-receipt of share certificates/bonus shares.

Type IV: Non-receipt of debenture certificates/interest on debentures/redemption

amount of debentures/interest on delayed payment of interest on debentures/redemption
amount of debentures.

Type V: Non-receipt of right forms/interest on delayed receipt of refund order.

BREAK-UP OF GRIEVANCES RECEIVED AND REDRESSED DURING THE

FORTNIGHT:
During the fortnight, SEBI received 1698 grievances against listed companies. In the
same period 2948 grievances were reported redressed. These redressed grievances
include grievances brought forward from the previous periods.
TYPE GRIEVANCES RECEIVED DURING GRIEVANCES REDRESSED
THIS FORTNIGHT DURING THIS FORTNIGHT
I 424 258
II 180 180
III 455 242
IV 251 2241
V 388 27
TOTAL 1698 2948

GRIEVANCES HANDLED BY SEBI

Small Investors’ are required to send their complaints, grievances to the
particular Regulator. SEBI has power to handle following types of grievances
TYPE / CATEGORY
i) Issue / offers -
1. Refund Order / Allotment advice
2. Revalidation of refund order
3. Duplicate R/O for correct amount
4. Duplicate R/O for identity
5. Cancelled Stock Invest (S.T.)
6. R/O after details furnished
7. Copy of encashed RO
8. Duplicate RO for correct details
9. Allotment against encashed SI.
10. Duplicate RO. after correction
11. Short refund
II) NON-RECEIPT OF DIVIDEND
III) SHARES: NON-RECEIPT OF CERTIFICATE IN/ AFTER
1. Exchange of allotment Letter
2. Conversion
3. Splitting
4. Transfer
5. Endorsement
6. Bonus Transmission
7. Consolidation
8. Duplication on submission of Indemnity Bond
iv) MISCELLANEOUS : NON-RECEIPT OF
o Annual Report
o Offer of Rights
o Interest on delayed Refund Payment
o Registration of change dividend
o Interest on delayed dividend
o Non list of securities on stock exchange
o Any other
REDRESSAL OF INVESTOR GRIEVANCES:

(I) SECURITIES EXCHANGE BOARD OF INDIA

SEBI has established a comprehensive investor grievances redressal mechanism. The
Investor Grievances Redressal and Guidance Division of SEBI assists investors
who prefer to make complaints to SEBI against listed companies. Each
complaint received by SEBI from the investors is acknowledged and a
reference number is sent to the complainant. Each complaint is taken up with the
company and if the complaint is not resolved within a reasonable time, a periodical
follow up is also made with the company. SEBI officers also hold meetings
with the company officials to impress upon them their obligation to redress
the grievances of investors. Errant companies are warned of stern action for their
failure to redress grievances. Recalcitrant companies are referred for prosecution.
SEBI in its annual report 2004-05 has presented the cumulative status of
investors’ grievances received by SEBI, those resolved by companies and the
redressal rate in this regard during the last ten years as reproduced below:
 Redressal Of Investor Grievances

It may be observed from above that redressal rate of grievances is over

90% during the last four years. SEBI has, however, not disclosed the age-wise
pendency of complaints.
In order to ascertain correct status of redressal of grievances where companies did
not report back, SEBI has been conducting an exercise of sending reply paid post
cards to investors requesting them to reply as to whether their complaint has been
resolved by companies or not. Year wise data in this regard have been
compiled from three annual reports of SEBI pertaining to the year 1998-99 to 2000-
01. Post cards are sent only to those investors by SEBI where the complaints are
shown as pending in records of SEBI i.e. where the companies have not reported
redressal of those cases, when SEBI wrote to investors by sending post cards, they
reported redressal of their
Complaints.
The data regarding age-wise pendency of complaints would give an indication
of the effectiveness of grievances redressal machinery. This information is,
however, not available in the SEBI’s Annual Report.
(II) DEPARTMENT OF COMPANY AFFAIRS
The Department of Company Affairs has also set up an Investors’ Protection Cell,
Investor Complaints received in this Cell are processed for action by referring
them to the concerned companies for speedy redressal. An acknowledgment is
issued and subsequently, action taken as informed by the company is also
communicated to the complainant. The Department has reportedly processed
7834 complaints during the period from 1.4.2000 to 31.12.2000 out of
which, 7343 complaints were satisfactorily redressed. During the period 1.4.2000
to 31.12.2000, prosecution against 90 companies were ordered by Investors’
Protection Cell.
(III) STOCK EXCHANGES
The data regarding receipt and disposal of investor grievances in respect of years as
presented by BSE and as observed from the fact book of NSE are shown below

Bombay Stock Exchange Ltd. resolved 1060 Investors complaints against

companies during the month of JANUARY 2007.

During the month, BSE Ltd. received 560 complaints against 359 listed companies. In
the same period 1060 complaints were resolved against 533 listed companies. These
resolved complaints include complaints brought forward from the previous periods.

TYPE OF COMPLAINTS COMPLAINTS RECEIVED COMPLAINTS RESOLVED

Active Suspended Total Active Suspended Total

I 60 0 60 50 1 51

II 97 0 97 86 9 95

III 141 1 142 122 94 216

IV 105 79 184 197 433 630

V 77 0 77 66 2 68

TOTAL 480 80 560 521 539 1060

The complaints received by BSE Ltd. from investors have been categorized as under:
Type I: Non-receipt of refund orders/allotment letters/stock invests.
Type II: Non-receipt of dividend/interest
Type III: Non-receipt of share/debenture certificates after transfer/
endorsement/conversion and bonus shares.
Type IV: Non-receipt of Annual Reports, right forms/interest on delayed receipt of
refund order/dividend, etc.
Type V: Non-receipt of credit with Depository Participants.

Survey of literature
Various surveys have been undertaken by various agencies, institutions during last
twenty years. In 1999/2000 SEBI has also undertaken, supported a survey to
understand the nature of investment, concept of investment, psychology of
Investors in India. Institutions like, Society for Capital Market Research and
Development, Delhi, are conducting the survey regularly. NGOs / Investors’
Associations also undertake survey to explain status of Small Investors, Small
Investors Protections System.
Three different Surveys are given to understand psychology, status of Small
Investors and that of Indian Capital Market.
 Survey of Indian Investors conducted by Securities and Exchange Board of
India (SEBI) & National Council of Applied Economic Research (NCAER) –
1999/2000
 Survey regarding Problems of Small Investors and Measures to
Safeguard their Plights -2003 (Research Study Sponsored by: IEPF, Department
of Company Affairs, Ministry of Finance, Govt. Of India), Research Report
prepared by Prof. Sri Ram Khanna with Paramjeet Singh, Vanita Tripathi the
(Voluntary Organization in the Interest of Consumer Education) VOICE Research
Team, New Delhi.
 Survey of Indian Share Owners –1991, by Society for Capital Market
Research and Development, Delhi.
Survey of Indian Investors conducted by Securities and Exchange Board of India

(SEBI) & National Council of Applied Economic Research (NCAER)

First time a major survey was undertaken to understand the status of Small
Investors and Capital Market in India. A massive Survey conducted by National
Council of Applied Economic Research on behalf of SEBI was undertaken in
the year 1999-2000. It s report says:
“The Indian securities market has undergone a substantial and speedy change in the
last few years. Indeed its present form and content hardly bears any resemblance
with its earlier state. And for the investor population, no recent estimate has been
available for want of a detailed scientific enumeration.
This has handicapped SEBI, market intermediaries, researchers and
investors in deciding their policies and investment choices respectively.To
overcome this problem SEBI requested the National Council of Applied
Economic Research (NCAER) and agency known for its expertise and
experience in conducting objective and large scale household surveys, to
undertake a survey of the Indian investors. Primary objective of survey was to
have a demographic profile of investors and investor households investing both
directly and indirectly. This was expanded also to find out the investment
preferences, perceptions about risks in investments, level of awareness and
experience of investors while investing in the Indian securities market and the
reasons which inhibit some household from investing in the securities market.
Survey regarding Problems of Small Investors and Measures to Safeguard
their Plights - 2003 (Research Study Sponsored by: Department of Company
Affairs, Ministry of Finance, Govt. of India), Research Report prepared by Prof. Sri
Ram Khanna with Paramjeet Singh, Vanita Tripathi and the (Voluntary
Organisation in the Interest of Consumer Education) VOICE Research Team, New
Delhi.
DR. N.L. MITRA COMMITTEE ON SMALL INVESTORS’ PROTECTION
The Committee touched the subject of various regulators and the Grievances
Redressal System. As stated earlier about the petition filed by Investors
Grievances Forum on the ‘Small Investors’ Redressal System – Status’ the
Government, MOF, SEBI appointed a Committee to look into the status and
suggested the measures about the Grievances Redressal System and measures for
Small Investors’ Protection. Dr. N.L. Mitra of the Central for Business Law Studies,
Bangalore was appointed as Chairman of the Committee. Dr. Mitra Committee
th
submitted its report on 17 April, 2001. In its report the Committee felt need for a
separate Act for Investor Protection.
Dr. N.L. Mitra report has observed that the provision regarding protection
of investor’s interest is spread over various Acts. Investment in securities is
covered by the Securities Contract (Regulation) Act and the Securities and
Exchange Board of India. If securities are related to incorporated
companies then the Companies Act is involved.
The Act also envisages appointment of Special Courts.
The Committee also suggested to form an Agency for providing
compensation.
The problem of investors’ protection arises due to following factors: -
(i) Persons or entities raising funds for specific purposes but not applying the
fund for that specific purpose or applying the fund for different purposes without
the consent of the people supplying the fund either negligently or
intentionally.
(ii) Raising the fund knowingly that the fund shall not be used for the purpose of
which it was raised and shall be diverted.
(iii) Raising public funds by cheating or committing breach of trust.
SMALL INVESTOR PROTECTION BY Kiritsomaiya
Various suggestions, public debates are going on to strengthen and simplify the
redressal system. The consumer forum provides an expeditious remedy to who has
suffered loss on account of deficiency in goods/services purchased by him.
A similar arrangement is called for redressal of investor grievances, given the rate of
disposal of our judicial system. The investor forum as well as other authorities should
have power to dispose of the cases summarily and to award compensation to the
investor. It is not enough if the culprit is punished. The culprit needs to be
punished in an exemplary manner, while investor should have means to
recover his loss caused by the culprit
Suggestions to compensate the financial losses of Small Investors’ are being
discussed and demanded by the Investors’ Associations. The depositors are
protected upto Rs.1 lakh in the event of liquidation/bankruptcy of a bank. This
protects innocent depositors and thereby contributes to the stability of the financial
system. A similar mechanism may be developed to compensate an investor upto
Rs.5 lakh if he suffers a loss on account of the failure of the system or mischief by
any market participant.
Investors’ Activists-Authorities & Redressal System by Sucheta Dalal
Financial Journalist cum activists like Sucheta Dalal is consistently
suggesting “Centrally Available Information System – Redressal System and
Avenues” is made available to the Small Investors’. NSE has also expressed their
opinion in favour of such Central Information Depository System.
An investor normally deals in securities through an intermediary, whose acts of
omission and commission can cause loss to him. In order for the investor to
choose the right intermediary through whom he may transact business, it may be
useful to help him in taking informed decision by making details of intermediaries
available to him. The details may include the form of organization, management,
capital adequacy, liabilities defaults and penal actions taken by the regulator
and self-regulatory organization against the intermediary in the past other
relevant information. Similarly the details about the issue should be
available to the investors.
Investors’ Associations and activists have made several suggestions
regarding the Grievances Redressal System and Regulatory System.
Shri A.K.Narayan committee on Tamilnadu Investors’ Association
As far as the Grievances Redressal System is concerned it is really in shambles.
Hardly anybody wants to take the responsibility to solve the investors’
complaints. They are made to run from pillar to post and also made to spend
money though they get nothing in return.”
“There are too many market Regulators, namely RBI, SEBI/DCA and so
on.We don’t understand the need to have different regulators to solve investors’
problems. So my suggestion is that there should be a body like SEBI, who will be
in a position to solve all the investors’ grievances/ problems. There should be a
standard committee in SEBI comprising of SEBI/RBI/DCA to look into investors’
complaints every month.”
Role of NGOs in Investors education
Many problems relating to investors, particularly, small investors can be tackled by
educating the investors. Small investors should be encouraged to either invest through
Mutual Fund mechanisms, or should take investment decisions only after getting
adequate information about risks and rewards. The investors should also be
encouraged to participate in the proceedings at general meetings (either physically or
through postal ballot, including by electronic media) in a constructive manner. This
requires improving the general awareness of the investors through informal
mechanisms. The help of various NGOs engaged in investor protection activities
should also be taken for this purpose. The Committee perceives a positive role for
Investors’ Associations / NGOs in this regard which should be supported by both the
Government as well as corporate entities.

Article, by suchetadalal.
The judiciary will have to help the investors cause - (5 November 2000)
Such funding is imperative for building up investor associations – particularly in
smaller towns such as Jodhpur, Hyderabad, Kanpur, Coimbatore, Chennai, Jaipur and
Patan. But nine recognized associations couldn’t begin to address investors’ needs. If
India has 23 stock exchanges, it stands to logic that there should be at least as many
strong investor associations in the country. Instead, Mumbai which headquarters four
stock exchanges (BSE, NSE, OTCEI and the Integrated Stock Exchanges of India)
has one politically backed association, which derives most of its clout from its main
promoter—Bharatiya Janata Party MP, Kirit Somiaya.
The problem is that investor groups need seed money to commence their activities,
establish a record of accomplishment and to achieve the minimum acceptable
membership. It is only then that they are eligible for accreditation and monetary
grants.
The problem is that investors are unwilling to join investor groups because most of
them have a pathetic track record. Until recently, SEBI also treated Investor
associations as a necessary evil, rarely consulted them and refused to allow them
more than a token role in the process of framing regulation.
There is a similar problem with the way the judicial system functions and perceives
investor issues. Not only is litigation a slow and expensive process, but even in the
few cases where courts have ruled in favor of investors (including consumer courts)
the relief and costs granted to them are so niggardly that they only acts as a deterrent
to investor litigation.
The Department of Company Affairs committee
The corporate world has also responded in a positive and pro-active manner. Policy
reform has been the main focus of the Department ever since the Government took
the road of liberalization and globalization.
The Department is engaged in the exciting task of making the Indian companies to
excel in a globally competitive market, create wealth for the shareholders and to the
nation by creating an investor friendly environment.
A Committee has been set up to propose a modern competition law in the light of
international economic developments and the need to promote competition, relating to
competition law including law relating to mergers and de-mergers. The Committee
consists of experts and is headed by Shri S.V.S. Raghavan. The Committee would
inter-alia recommend suitable legislative framework, changes relating to legal
provisions in regard to promotion of competition, trade practices as well as
appropriate administrative measures.
Similarly a Committee to draft legislation for formation and conversion of
cooperative business into companies has been set up under the Chairmanship of Dr.
Y.K. Alagh. The Committee would examine the feasibility of framing a legislation,
which would enable incorporation of cooperatives as companies and help conversion
of existing cooperatives into corporate entities and provide necessary legal
framework. The Committee will give its report shortly.
SIPC/INVESTOR PROTECTION TRUST SURVEY
Two of the few "bright spots" in the survey findings had to do with account
statements and diversification. In responding to a key behavior question, nine in 10
investors said that they regularly review their brokerage account and/or mutual fund
statements. A number of organizations -- including SIPC -- have placed a major
emphasis on the need for investors to protect themselves by reviewing brokerage
account statements in detail. On the knowledge side of the survey, nearly three out of
four investors (74 percent) showed that they understand the concept of diversification,
which has been a major focus of investor education efforts by the Investor Protection
Trust and other groups.

SIPC President Stephen Hardback said: “We are encouraged that people understand
the need to go over their account statements carefully to make sure that everything is
in order. But these findings indicate just how big a job remains in front of
organizations such as SIPC that are committed to investor education. When four out
of five Americans mistakenly think that there is an agency out there somewhere that
‘insures’ them against investment fraud losses, we obviously have our work cut out
for us.”
Survey conducted by Secretary of State Todd Rokita for Investor Basic Training

It's a time-tested truth that education is the key to success in nearly all areas of life—
including investing. Consumers that make informed investment choices are
significantly less likely to fall victim to fraud, and in turn, less likely to lose
their money in unsound investments.
Unfortunately, a statewide survey conducted by Secretary of State Todd Rokita shows
that nearly two-thirds of Indiana adults who own financial investments have
little or no knowledge about potential fraud schemes or the security of such
investments.
To help combat this problem, we have included some helpful information and
valuable resources for current investors and Hoosiers who may be considering
investing in the future.
Indian Household Investors Survey -2004
The Investor Education and Protection Fund constituted u/s 205C of the Companies
Act has been engaged in the education of investors in India. Various activities have
been undertaken by the IEPF. Prof L.C. Gupta, former member SEBI conducted a
survey of ‘Indian households’ Investment Preferences’, which probably sets the
record straight on several issues. He found that the number of investors in India is
stagnating since 1997 and that just about 18 per cent of the investor population thinks
that the Indian stock market is a ‘good place for long-term investment’. Also,
investors say that reforms have made the secondary market safer but the new issue
market is much riskier—this is the exact reverse of their perception a decade ago. The
IPO market is in the doldrums since 1996 except for the IT bubble of 1999-2000. In
order to understand the behavior of small investors in India, a Survey was conducted
under the aegis of the IEPF.

JPC Report On Serious Flaw In The Report

The JPC report however suffers from a very serious weakness. This weakness pertains
to the failure to establish the contribution of the nexus between brokers, bankers and
most importantly corporate entities. Not that the JPC was unaware of this serious
lacuna in their findings. It states candidly - "This Committee holds that even as there
are valid reasons to believe that the corporate house-broker-bank-FII nexus played
havoc in the Indian capital market through fraudulent manipulations of prices at the
cost of the small investors, this Committee were severely handicapped in the matter of
making any purposeful recommendations because of non-availability of required
support from concerned regulatory and other bodies with necessary material. This
issue acquires added importance in view of the recommendations of the 1992 JPC
regarding the urgent need to go into this unhealthy nexus of corporate entities-
brokers-banks and others".

So far as the enquiry by the regulators, the Committee had to make good with the
manner in which these regulatory bodies were conducting their enquiries. This has
been noted with anguish by the Committee - "SEBI furnished four sets of interim
reports inclusive of its investigation regarding scrips of certain corporate bodies. The
Committee's insistence for SEBI's final findings regarding the role of
promoters/corporate bodies in the price manipulation of the scripts yielded yet another
set of reports most of which were again of interim nature and were received as late as
in November 2002. Due to non-availability of final report from SEBI, the Committee
could not have the opportunity to take oral corporate bodies".
Main Committee Apex Committee
There is a Committee (Commonly referred to as Main Committee or Apex
Committee) to administer the IEPF. Pursuant to Section 205C(4) read with Rule 7 of
the IEPF Rules 2001, the Central Government has constituted a Committee vide SO
No. 125(E) dated 28-1-2004. Secretary, Department of Company Affairs are
Chairman of the Committee. The members are representatives of Reserve Bank of
India, Securities Exchange Board of India, and experts from the field of investors?
Education and protection.

The Committee shall recommend the following activities relating to investors?

Education, awareness and protection:

(a) Education Programme through Media;

(b) Organizing Seminars and Symposia;
(c) Proposals for registration of Voluntary Associations or Institution or other
Organizations engaged in Investor Education and Protection activities;
(d) Proposals for projects for Investors? Education and Protection including
research activities and proposals for financing such projects;
(e) Coordinating with institutions engaged in Investor Education, awareness
and protection activities; The Committee may also be entrusted with such
other functions for carrying out the objects for which the Fund has been
established.

Investor Protection and Equity Markets by Andrei Shleifer and Daniel

Wolfenson

In this research a simple model of an entrepreneur going public in an environment

with poor legal protection of outside shareholders. The model incorporates elements
of Becker’s (1968) “crime and punishment” framework into a corporate finance
environment of Jensen and Meckling (1976). He examines the entrepreneur’s decision
and the market equilibrium. The model is consistent with a number of empirical
regularities concerning the relationship between investor protection and corporate
finance.
Recent research reveals that a number of important differences of financial systems
among countries are shaped by the extent of legal protection of outside investors from
expropriation by the controlling shareholders or managers.
Corporate Governance, Investor Protection, and Performance
In Emerging Markets by Leora F. Klapper

Recent research studying the link between law, and finance has concentrated on
country-level investor protection measures, and focused on differences in legal
systems across countries, and legal families. The authors extend this literature, and
provide a study of firm-level corporate governance practices across emerging markets,
and a greater understanding of the environments under which corporate governance
matters more. Their empirical tests show that better corporate governance is highly
correlated with better operating performance, and market valuation. More important,
the authors provide evidence showing that firm-level corporate governance provisions
matter more in countries with weak legal environments. These results suggest that
firms can partially compensate for ineffective laws, and enforcement by establishing
good governance, and providing credible investor protection. It also Show that firm-
level governance, and performance is lower in countries with weak legal
environments, suggesting that improving the legal system should remain a priority for
policymakers.
Investor protection and demand for equity by
Stockholm School of Economics

This paper develops a simple equilibrium model showing that investor protection has
an impact on stock market development also through the demand for equity. A joint
rationale is provided for the lower returns of weak corporate governance stocks and
investors' portfolio decisions. In this model, investor protection affects how a firm's
cash flows are divided between security benefits, which accrue to all shareholders
pro-rata, and private benefits, which only the controlling shareholders have access to.
This division in turn affects the prices that different classes of investors are willing to
pay for their stocks.

Modern tech should aid in protecting investors’ by FICCI

The Federation of Indian Chambers of Commerce and Industry (Ficci) and the
Society of Indian Law Firms (SILF) Research Paper on securities market regulations
has suggested wide-ranging measures to streamline the operation of the Sebi Act,
regulations on buy-back of shares, takeover code, insider trading, public deposits and
the role, responsibility and accountability of independent directors. These issues
assume importance in the light of developments taking place in the capital market.
The study shows that the Indian capital markets have witnessed significant reforms on
the structural, operational and regulatory front over a period of time and made Indian
markets comparable to many developed and emerging markets.
Some of the findings and suggestions of the paper are:
• On the question of public deposits it argues, defaults should not be cognizable
offence as these are by very nature unsecured, are driven by risk and reward
trade offs and points out that fraud, irrespective of profit or loss, should be
punished.
• Sebi and ministry of company affairs should make a distinction in terms of
defaults.
• For investors’ protection, the use of modern technology, Internet, computers
should be enabled to enhance the efficiency of the disclosure process.
RESERCH METHOLOGY
Investor protection is as important an issue in India today as it was in 1980s and
1990s but the whole complexion of the problem has changed. Investor protection
Education Foundation is a natural outgrowth of the long term-standing mission to
protect investors and uphold the integrity of the markets. Investors need a better sense
of what they are doing and why. At the Foundation, we meet this need by funding
innovative research and educational projects aimed at segments of the investing
public who could benefit from additional resources.
• Expand the body of knowledge and/or provide practical materials that will
have a positive impact on investor education or protection
• Research methods to improve disclosure to investors about investments and
financial services
• Encourage investors to check the background of financial professionals prior
to doing business with them
• Empower the nation's young people that are about to enter the workforce to
better prepare for retirement and to meet other financial goals

NEED OF THE STUDY

Investors are backbone of the capital market. Mobilizing savings from the small
investors, channelizing the same into the capital market and making it
available for industrial development can help to have better economic
growth. Developed countries of the world have used this route for achieving the
economic growth.
India being a developing country accepted this route. Importance to the small
investors got momentum after the economic liberalization of 1991.Though
the market capitalization in the capital market went up from Rs.54, 000 Crores in

st
1990 to almost Rs.15, 00, 000 Crores in 21 Century, a series of scams during the
same period caused concern to small investors, regulators and policy makers.
Investors need to understand that the agency would investigate complaints from a
regulatory perspective only and there can be no assurances that formal charges will
be filed against the broker.
OBJECTIVES OF THE STUDY
 To study the Sebi guidelines for Retailer investor
 To determine the role of stock exchange for investor protection
 To analyze the shortcomings of the stock exchange regarding investor
protection
 To assess the satisfaction level of investor regarding investor protection
 To evaluate the role of the broker with regard to sebi guidelines for investor
protection

RESEARCH DESIGN OF THE STUDY

This research work is based on various data, charts, tablets, and survey. Primary
and secondary data have been collected from various sources.
Primary data was collected through sample survey. A questionnaire containing
various aspects of savings, attitude, income level, habits of investors were covered.
This data belongs to NCR.
Investment in small savings, fixed deposits, debentures, company deposits, bank
deposits, equity share application, equity share purchase from secondary market i.e.
from stock exchange, investment in Mutual Funds are covered.
The depth of investors’ education, awareness among them, importance and status.
Help and support for filling the questionnaire, guidance from experts being
obtained.
The present study is descriptive & exploratrary study based on various data,
opinion, collected, gathered from various books published on capital market, debates
of parliament, annual reports-journals, publications of RBI, SEBI, Government
Agencies, business magazines, business newspapers and others.
Primary data have been collected through the field survey conducted in
NCR. The data about grievances of small investors were collected from the Investor
Grievances Forum.
Views of experts, authorities have been gathered, collected, noted through the
personal interaction and interviews taken during the last quarter of 2011.
SCOPE OF THE STUDY
The importance of Investors has been recognized in the development of the country.
India being a developing country, expansion, growth of Capital Market is fast.
Savings rate of 22% in India demands study of investment pattern, structure
and experience.
The scheme pertaining to Capital Market, secondary market, primary market,
plantation companies, Non Banking Finance Companies, fly-by-
night companies, vanishing companies, “Eke ka Double – Debt Fund Schemes”.
The study is confined to Investors, their habit, their experience about Grievances
Redressed System, necessity of the same. Though figures, data covering whole of
India is covered as per availability of data /information. The survey concentrated
mainly on Ludhiana in Punjab state of India.
Presently, Investor is worried about Grievances Redressed System, demands
protective measures, accountability from Regulators, more transparency and
speedy justice. Positive atmosphere attracts more small savings in the Capital
Market and finance market, which positively pushes industrial development,
i.e. economic growth of the country.
DATA COLLECTION
Sampling procedure:

Our sampling procedure was designed to overcome the problem due to widespread
reluctance to disclose personal income and investments. Our method of sampling is
good enough to give a feel of the entire system by covering the main stream of
investors.
Admittedly, the sample does not represent the country’s entire population but only
the “universe of potential investors”. Those below the poverty line or having little
voluntary savings for financial investments or no ability to understand investments,
like shares and bonds, had to be excluded, because they were irrelevant for the
purpose of the present survey.
Sample size and characteristics

The survey covered 100 investors who were interviewed through Questionnaire-.
These, 100 responded was investors of NSE BSE Advisor, banks, India bulls, karvy
securities ltd. the results show a high degree of consistency and comparability.

Investors

NSE BSE Advisor 40

Karvy securities ltd 20

India bulls 20

Banks 20

Total 100

Limitation of the study

Although the survey has been conducted very carefully but some points remain in
every survey. It is also happen with me. These points remain due to some reasons,
that reasons are as fellow:

 Most of investors are filled the questionnaire very quickly.

 Some of investors are refuse to participate in the survey.
 Most of the investors are conservative and precise in their replies.

Future scope of study

The Capital Markets in India have seen a period of unparalleled growth in the last two
decades of the twentieth century. The Indian Capital Markets, at the dawn of the new
millennium, face a number of challenges, which would prove critical for its future
development and growth. Investor Education and Training is one of the most critical
areas, which demand greater attention and response from all the major participants in
the capital market.
BSE has been in the forefront of providing Investor education and training to the vast
Investor populace in India as also enhancing the safety and security features in the
capital market mechanism so as to ensure the highest level of Investor protection.

• BSE has plans to set up additional Investor Assistance centers in major cities.
The objective behind the setting up of these centers is to provide a local forum
for the redressal of investor grievances and to make available all necessary
data, information and other facilities to the investor at a convenient location in
their respective areas.

• BSE’s collaboration with ZEE Interactive Learning Systems is a very

important step in this direction. BSE and ZEE would work together to provide
knowledge, information and awareness through structured training on various
aspects of the capital markets to the common investor. The collaboration
would be initiated with a pilot series of 26 episodes, which will be aired 3
times a week .The timing of the telecast, would be based on the target segment
and would be decided by mutual consultations between BSE and ZEE. The
television series would be tentatively called "BSE Investor Awareness
Program". BSE would retain the naming rights to the program.
 Analysis & interpretation

Analysis of data:
Q: 1 what is your income

Total no. of investors income wise :

Monthly Inco No. of % of

me (Rs.) respondents respondents
Upto 10000 31 31

10,001-15000 20 20
15001-20000 18 18
20001-25000 15 15
Over 25000 16 16
Total 100 100

Q: 2 what is your age

Total no. of investors age wise

Age Groups No. Of %

(Years) Respondents Of Respondents
Upto 25 5 5
26-30 7 7
31-40 35 35
41-50 23 23
51-60 20 20
61-65 5 5
66-70 3 3
71 and above 2 2
Total 100 100
Q: 3 which type of investor you are

As we know the there are mainly two types of investors, an individual who purchases
small amounts of securities for him/herself, as opposed to an institutional
investor. Also called retail investor or small investor. Entity with large
amounts to invest, such as investment companies, mutual funds, brokerages,
insurance companies, pension funds, investment banks and endowment
funds..

Types of investor

Institutional
Retailer

INTERPRETATION:
The above data shows that 90 retailer investors and 10 institutional investor are
transacting in the market .

Q: 4 Are you aware about Demit

Demit account are compulsory for the trading. Without demit account investors are
not able for trading.

Aware about demit

Investors Percent
YES 83 83
NO 17 17
Total 100 100
 Aware about Dem at
st 100 .00 % 8 3.00 %
n
e
d
n 50 .00%
o
p 1 7.00 %
s
re
f 0 .00%
o
% YES NO

INTERPRETATION:
The above data shows that 83% investors are aware about demit account and 17%
investors are not aware about the demit account.

Q: 5 what is the nature of your trading

Nature of trading
Option Investors % of
Investors
Long term 10 10
Medium term 30 30
Short term 50 50
Day trader 10 10
Total 100 100
 60%
50%
50%

40%
30%
30%

20%
10% 10%
10%

0%
Long term Medium term Short term Day trader

no of investors

INTERPRETATION:
The above data shows that 10% investors are trading in long term, 30% investors are
trading in medium term, 50% investors are trading in short term, 10% investors are
trading in day trader.

Results: Youngsters can invest little more percentage of his savings in risky
equity instruments. The person getting retirement compensation would like to go
for safe, steady instrument, giving regular income, cash inflow.

Q: 6 which security trade frequently used by you

securities trade frequently by investors

Securities trade frequently by investors

Types of Securities No of Percent
respondents
Equity 74 74
Bonds 10 10
Debentures 10 10
 Future and Options 6 6
Total 100 100

80% trade frequently

70%
60%
50%
40%
30%
20%
s
e
v
tr %
fin
o

10%
0%

F a d
n
B
d
n
o
s

n O
tio
s p
E
u
q
ity

tre
u
INTERPRETATION: rsD
tu
n
b
e

The above data shows that 74% investors are investment in the equity, 10% investors
are investment in the bonds, 10% investors are investment in the debentures and 6%
investors are investment in derivatives.

Q: 7 In which security trade you lost your money in past

Lost money in the past

Lost money in the past by investing

No of Investors Percent
Mutual Funds 5 5
Shares 45 45
Derivatives 15 15
No 35 35
Total 100 100
 Lost Money
60%
45%
35%
40%
15%
20%
5%
0%
Mutual Shares Derivatives No
Funds

INTERPRETATION:
The above data shows that 5% investors are lost his money in the mutual funds, 45%
investor are lost his in the equity, 15% investors are lost his money in Derivatives
and 35% investors are says that they have no face any problems regarding securities.

Q: 8 Exchange in which share are listed, which you own

Exchange in shares are listed

Listed Companies Shares

No Of Percent
Investors
NSE 46 46
BSE 32 32
Other 22 22
exchange
Total 100 100

LISTING COM PANY SHARES

S 60.00% 46.00%
R
O 40.00% 32.00%
T 22%
S
E 20.00%
V
IN 0.00%
F
O NSE BSE O th er exch an g e
%

INTERPRETATION:
The above data shows that 46% investors are Listed His Shares in NSE,32% investors
are listed his shares in the BSE, 22% investors are listed his shares in other stock
exchanges.
Q: 9 are you aware about investor grievances cell of NSE, BSE

aware about investor grievances cell of NSE, BSE

No of respondents Percent
Yes 55 55
No 15 15
Can Not Say 30 30
Total 100 100

Investor Grievances Cell

s
r
to 55
s 60
e 50
v 40 30
n
i 30
f 15
o 20
%10
0
Yes No Can Not Say

INTERPRETATION:
The above data shows that 55% investors are know about the investor grievances
fund, 15% investor are lost his in the equity, 30% investors are says that they have no
face any problems regarding securities.

Q: 10 are you aware about investor protection fund of stock exchange

The Government has established an Investor Education and Protection Fund (IEPF) under Sec. 205 C
of the Companies Act, 1956 under which unclaimed funds on account of dividends, matured deposits,
matured debentures, share application money etc. are transferred through the IEPF to the Government
by the company on completion of seven years

aware about investor protection fund of stock exchange

No of respondents Percent
Yes 50 50
No 40 40
Can Not Say 10 10
Total 150 100

Know About Investor Protection

Fund
60 50
40
40
20 10

0
s
e
v
tr %
fin
o

Yes No Can Not Say

INTERPRETATION:
The above data shows that 50% investors are know about the investor protection fund,
40% investor are not know about protection funds

Q: 11 are you satisfied with grievance mechanism adopted by stock exchange to

resolve complaints adequate

Grievance mechanism adopted by stock exchange to resolve complaints

adequate

No of respondents Percent
Yes 60 60
No 25 25
Can Not Say 15 15
Total 100 100
 80 60
60
40 25
15
20
%

0
fin
s
e
v
tr o

Yes No Can Not Say

INTERPRETATION:
The above data shows that 60% investors are think that grievance mechanism adopted
by stock exchange to resolve their complaints adequate and 25% investors are think
that their complaints are not adequate

Q: 12 Do you like to attend the workshop & seminars if organized

like to attend the workshop & seminars if organized

Investors Percent
Yes 90 90
No 10 10
Total 100 100
Attend the Seminar
90
100
80
60
40 10
20 0
0
s
e
v %
fin
o

Yes No Can Not Say

tr

INTERPRETATION:
The above data shows that 90% investors are like to attend the seminar but 10 %
investors are not interested to attend the seminars.

Media prefer the most for investor education

 NO OF % OF
RESPONDENDS RESPON
DENDS
TV 12 12

Newspapers 14 14
Seminars 18 18
Magazines 15 15
At the stock 22 22
exchange
ALL 29 29
Total 100 100

35
30
25
20
12
15
10
5
0
T.V Newspapers Seminars Magazines stockex All

INTERPRETATION:
The above data shows that 12% investors are prefer the most Tv media, 14% investors
are prefer the most newspapers media, 18% investors are prefer the most seminars
media, 15% investors are prefer the most magazines media, 22% investors are prefer
the most stock exchanges media, 29. % Investors are prefer all the media.

Q: 14 Role of broker in investor protection

Role of broker in investor protection

Investors Percent
Important 85 85
Not important 15 15
Can Not Say 0 0
 Total 100 100

ROLE OF BROKERS

100 85
80
60
40 15
20 0
0
R
S
E
V
T%
O
IN
F

Important Not important Can Not Say

INTERPRETATION:
The above data shows that 85% investors are think about that role of brokers are very
important for the investor protection but 15% investors are think role of broker are not
important for investor protection.

Q: 15 what is the best solution to protect investor’s right

best solution to protect investor’s right
 The best solution to NO OF Percent
protect Investors
investor’s rig
Brokers and securities intermediaries 27 27
should be more honest

Wrongdoers should be severely 13 13

and swiftly punished

Increase regulation 18 18

Improve management of and 16 16

internal controls in companies

Educate investors more 26 26

effectively

Total 100 100

30%

25%

20%

15%

10%

5%

0%

INTERPRETATION:
The above data shows that 27% investors are think about that best solution to protect
investors right are brokers and securities intermediaries should be more honest, 13%
investor are think wrongdoers should be severely and swiftly punished, 18% investors
are think about that increase regulations, 16% of investor are think that improve
management of and internal controls in companies and 26% investors are think about
that educate investors more effectively.

Limitation of the study

A few limitations and constraints came in way of conducting the present study:-

• Sample area is very small.

• Few investors are not so much cooperative in giving the response of

questionnaire.

• Sample size selected may not be the true representative of the entire investors

• This being the first experience of the researcher of the conducting study such
as this, the possibility of better result, using deeper statistical techniques in
analyzing and interpreting data may not be ruled out.
 FINDINGS &SUGGESTIONS OF STUDY

 Regulators have always talked about investors and made new commitments
every time to protect them, forgetting the earlier ones. Major Banks, intermediaries,
brokers industrialists; business associations, mutual funds and corporate have sung
the same tune.
 The Media has always remained helpful towards creating awareness
among the investors. Surprisingly, scams still take place. Investors have either lost
or locked up more than Rs.50000 crore in various scams of the first ten years of
liberalization i.e. 1991-2001. What is missing is the lack of commitment.
 From investor protection viewpoint, we need to progress towards a more positive
approach than mere crisis prevention. The aim should be to ensure greater
orderliness in the working of the stock market and to assure all investors at all times
that they shall get a fair deal and shall be protected against malpractice’s

 Our analysis suggests that measures adopted often tend to be inadequate,

especially because no long-term view is taken or the attempt is simply to prevent an
immediate market crisis. Averting a crisis is, of course, important but market crisis
is an extreme event. It is rare in well-developed markets but was recurrent in India
and made the Indian market notorious.

 A significant finding of this study is that, contrary to popular belief; a

majority of investors in the stock market are long-term oriented investors
rather than short-term speculators. This is clearly indicated by our examination
of the investment strategies being followed at the individual investor-level. This is a
very healthy feature and should be encouraged by the policymakers and regulators.

 The study draws attention to the emerging phenomenon of what we call

“maturing of retail investors” in India. The bulk of the present generation of Indian
 retail investors got their exposure to the vicissitudes of the equity market during the
last 15 years, specially the 1990s.

APPENDIX -
INVESTOR COMPLAINT FORMS
(For Matters related to SEBI)
From:

Date:

To
Securities and Exchange Board of India
Investor Grievance and Guidance Division
P.B. No.19972, Nariman Point P.O. Mumbai –400 021
Dear Sir,
Kindly take up the matter with the company for immediate redressal of my
complaint, particulars of which are as under.
1. Name and address of the Investor …………………………………………

2. Name and Address of the Company……………………………………….

3. Name of the Registrar & Transferagent (if any)………………………….

4. SEBI acknowledgement Ref. No. (In case of Reminder) ………………

5. Type / category

i) Issue / offers -

Refund Order / Allotment advice

Revalidation of refund order
Duplicate R/O for correct amount
Duplicate R/O for correct amount
Duplicate R/O for identity
Cancelled Stock Invest(S.T.)
R/O after details furnished
Copy of encashed RO
Duplicate RO for correct details
 Allotment against encashed SI.
Duplicate RO. After correction
Short refund
ii) Non- Receipt of Dividend
iii) Shares non-receipt of certificate in / after

Exchange of allotment Letter

Conversion
Splitting
Transfer
Endorsement
Bonus Transmission
Consolidation
Duplicatrion on submission of Indemnity Bond
iv) Miscellaneous: non-receipt of
Annual Report
Offer of Rights
Interest on delayed Refund Payment
Registration of change dividend
Interest on delayed dividend
Non list of securities on stock exchange
Any other
6. Particulars of the Application / securities held

a)Full Name of First Applicant / Securities holder

b)Application Form No. / Folio No.
(Sellers in case of transfer.)

c) No. of securities applied / held

d) Mode of Payment
Cash Cheque/D.D. Stock Invest

No. Dt. - Drawn on –

e) Application deposited at

f) Bank Serial No.

g) Photocopy of acknowledge slip enclosed Yes No

h) Photocopy of acknowledge slip enclosed Yes No

i) Original Refund Order No. (In case of revalidation No.)

j) Period for which dividend amount due

k) Date on which securities were forwarded to company/Registrar

 l) Indemnity Bond sent for issue of duplicate Yes No

If yes, date

7. Other details if any, in brief

8. Dates of earlier correspondence with the company / Registrar

9. Enclosure, if any

Place: Signature of the first applicant

Date:
Note:
It would be advisable to address the complaints to SEBI only if Company /
Registrar has not responded inspite of having sent two reminders over a
period of atleast one month.
 COMPLAINT FORM OF COMPNAY LAW BOARD

Application by Depositor under section 58 A (9) Before the Company Law

Board [Name the Branch] Region Bench

In the matter of the Companies Act 1956 Section 58A AND

In the matter of [state the name of depositor / applicant]………………… AND

In the name of [state the name of company]

I Name & address of the depositor / applicant.

ii. Name of the company & addres of it

Regd Office …………………………………………………………

iii. Amount of deposit

iv. Fixed deposit receipt no. & date

[enclose the photo copy of receipt]

v. Terms & conditions of deposit and also of maturity of the deposit vi.

Details of payment made by the co. if any

vii. Actual amount due as on date of application

[Principal and interest]

viii. Details of correspondance, if any made ix.

between the company & the depositor

[copy of correspondence to be closed]

x. Any other particulars as may be considered relevant……………………. The

Depositor application therefore prays that ……………………………………

A. That the company, above named be directed to make repayment of the

aforesaid deposit/s alongwith interest due thereon, in accordance with the

terms and conditions of the deposit.

B. That such other orders be passed as the Company law board may deem fit in

the circumstances of the case.

Place: Signature of the depositor / applicant

Date:

NOTE- The Applicant shall be accompanied by a fre of Rs.50/- by way of

Bank Draft in favour of ‘The Pay & Account Officer, Department of Company

Affairs………..

[lace of location of the Branch]

This application and enclosure shall be made in duplicate.

 COMPLAINT FORMAT FOR MUTUAL FUNDS

Date

To,

Investors Relation Officer [Name the concerned Mutual Fund]

…………………………………………………………………………
Sir,
Subject …..Complaint in respect of non receipt of …….

1. Certificate / Membership Advice /Statement of Account ………..

2. Dividend through EDS ………………… Bank and Branch ……………..

3. Dividend / RIP statement ……………….. Period for ……………………

4. Repurchase / Maturity proceeds ………………………………………..

5. Switch over of units …………………. from …………….. to …………….

6. Dividend /RIP statement /Repurchase / Maturity / ……………………..

7. Bond units

8. Certificate /Diviend warrant on transmission units from ………………. to

……….. Zone/Br…………………………

9. Confirmation of Nomination

10. Confirmation noting change of address/ Bank particulars

11. In case of Bank Particulars

Name of the Bank / Branch …………………………………………………………. SB /

C.A. No. ………………………………………………………………………….
Reference:

i. Name of the Complainant …………………………………………………..

ii. M.F. Certificate details ……………………………………………………..

a. CertificateNo. ……………………….. b. Folio Number

You are hereby requested to resolve the complaint at the earliest.

Thanking you,
[Name and Signature of the complainant]
 COMPLAINT FORM FOR D’MAT

From:

Name …………………………

Date ………………………….

To,

Officer in charge

Investors GrievancesCell, NSDL,

Kamala Mills Compound

Lower Parel, Mumbai – 400 013

Tel: 2497 2964-70 Fax:2497 2993

e-mail : relations@nsdl.co.in

Sir,

Subject : (State nature of Complaint )

Reference : (State the D’mat A/c No. ……………………………………………..

& Script folio No. ……………………………………………………

With reference to the above, I have to state I haveD’mat A/c with ……………. Br.

…………………………………. vide No. ………………………………………

I have……………………………………. (State nature of order / complaint)

Hence, you are requested to look into the matter & give necessary direction to the

Depository Participant.

Thanking you,

(Signature in full)
 (Format of filing complaint under)

THE INVESTORS PROTECTION ACT

The State of Maharashtra, has enacted the Investor’s Protection Act in the interest

of small Investor. The investor may refer the provisions therein while filing the

complaint with the Competent Authority.

From:

Date:

To,

Hon’ble Collector / EOW Police The

Competent Authority Appointed under

Maharashtra

Protection of Interest of Depositor’s

Sub: Registration of complaint under Maharashtra Protection of

Interest of depositors Act 1999 and Rules thereunder

Ref: Complaint against/s………………………..

I, the undersigned, do hereby submit this complaint for your kind action aginst

aforesaid concern / establishment. The said establishment has failed to pay interest

/fixed deposits amount on maturity as agreed and failed to pay amount on

demand.

The aforesaid establishment has acted in contravention of aforesaid Act and has

committed breach of trust and contract by not honoring the cheques and not paying the

amount agreed.

The particulars of investment and due along with other particulars are given in

schedule I and the particulars regarding company and its directors and

personnel responsible for making payment to me are given in ScheduleII herein

below.
Hence you are requested to register this complaint and attach the properties

of the aforesaid establishment as per Act.

Place: Sign. of the Complainant

Date:
SCHEDULE I

PARTICULARS OF FIXED DEPOSITS

Sr. No. Int/W.No. FD No. FD No. Date of Date of

Demand Maturity

1.

2.

3.

4.

5.

SCHEDULE II

Name of the Company ………………………………………………………

Date of incorporation and its registration number

Registered office and the branch

Particulars about the person responsible for making payment.

(Give detailed information regarding the names and addresses of the directors etc.)

Sr. No. Name Age Address

1.

2.

3.

4.

5.

(The complaint is required to be submitted in triplicate, out of which on one

copy the acknowledge is to be obtained for further correspondence

 QUESTIONNAIRE
Q: 1 what is your income
A: a) up to 10,000 b) 10,000 to 15,000 c) 15,000 to 20,000
d)20,000 to 25,000 e)up to 25,000

Q: 2 what is your age

A: a) up to 25 b) 26 to 30 c) 31 to 40 d) 41 to 50
e) 51 to 60 f) 61 to 65 g) 66 to 70 h)71 above

Q: 3 which type of investor you are

A: a) Retailer investor b) Institutional investor

Q: 4 Are you aware about Demit

A: a) Yes b) No

Q: 5 what is the nature of your trading

A: a) long term b) medium term
c) Short term d) Day trader

Q: 6 which security trade frequently used by you

A: a) Equity b) Bonds
c) Debentures d) Future & options

Q: 7 In which security trade you lost your money in past

A: a) Mutual fund b) shares
c)Derivatives d) No

Q: 8 Exchange in which share are listed, which you own

A: a) NSE b) BSE c) other exchange
Q: 9 are you aware about investor grievances cell of NSE, BSE
A: a) yes b) no c) cannot say

Q: 10 are you aware about investor protection fund of stock exchange

A: a) yes b) no c) cannot say

Q: 11 are you satisfied with grievance mechanism adopted by stock exchange to resolve
complaints adequate
A: a) yes b) no c) cannot say

Q: 12 Do you like to attend the workshop & seminars if organized

A: a) yes b) no

Q:13 which type of media prefer the most for your knowledge
A: a) T.V b) Newspaper c) Seminars
d) At the stock exchange e) All

Q: 14 Role of broker in investor protection

A: a) Important b) Not important c) cannot say

Q: 15 what is the best solution to protect investor’s right

A: a) Brokers and securities intermediaries should be more honest.
b) Wrong doors should be severely and swiftly punished.
c) Increase regulation
d) Improve management and internal control in companies
e) Educate investors more effectively.
 REFERENCES

1. http://www.hinduonnet.com/businessline/iw/2001/06/24/stories/0724g05y.htm
2. Http--www.kiritsomaiya.com-PHDthesis-KIRIT SOMAIYA PH.D. VOLUME ONE.pdf
3. http://www.suchetadalal.com/articles/display/26/466.article
4. http://www.dca.nic.in/report/ar/ar99-2k.htm
5. .http://www.sipc.org/media/release13Dec05.cfm
6. http://www.in.gov/sos/securities/investmentwatch/basic_training.html
7. .http://www.mca.gov.in/MinistryWebsite/dca/report/household/householdm.html
8. .http://pd.cpim.org/2003/0126/12262003_jpc-2.htm
9. http://www.mca.gov.in/MinistryWebsite/dca/investors/iepf.html
10. http://post.economics.harvard.edu/hier/2000papers/HIER1906.pdf
11. .http://econ.worldbank.org/external/default/main?
pagePK=64165259&piPK=64165421&menuPK=64166093&theSitePK=469372&entityID=0000949
46_02041804272577
12. http://jobfunctions.bnet.com/abstract.aspx?promo=50002&docid=167621
13. . http://www.ficci.com/news/viewnew