LIC IPO: Sebi seeks reply from banks for 'opening' demat accounts on pretext of state-run insurer's upcoming issue; these banks under scrutiny

Market regulator Security and Exchange Board of India (SEBI) has sought an explanation from banks over their offers to customers for opening Demat account on the pretext of LIC’s Initial Public Offering (LIC). Zee Business’s Anurag Shah brings this exclusive report.    

The market regulator has sought a reply from banks which have been giving offers to the customers for opening demat accounts in the name of LIC IPO.

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The market regulator has taken cognizance of this matter and sought replies from various banks. Shah said that the offers are being given by the private and public banks.

He said that an explanation has been sought from IDBI Bank, HDFC Bank as the they had undertaken big marketing drives for opening demat accounts on the pretext of LIC IPO. 

On stepping into the bank branches, one would find that the marketing is being done based on the LIC IPO. The offers, he said, include full waiver of charges on opening the demat accounts for one year; no charges on opening of the account and so on and so forth. 

He said that the regulator was against any such practice and considers this a wrong and in violation of the SEBI rules. 

It is expected that at least 1 cr new demat accounts will be opened for the biggest ever IPO launch in India.  

Shah said that this year has seen companies flooding the primary markets with the launch of public issues.

SEBI has also taken note of the practice prevalent among many LIC agents of selling LIC policies, luring customers with likelihood of shares getting assigned to them when the IPO is launched.  

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#ZbizExclusive | LIC IPO के नाम पर डीमैट अकाउंट ऑफर पर SEBI ने बैंकों से मांगी सफाई

- बैंक ब्रांचों पर #LIC IPO के नाम पर डीमैट अकाउंट के ऑफर्स को गलत माना

- IDBI बैंक, HDFC बैंक से सफाई मांगी

पूरी खबर जानिए अनुराग से...@AnilSinghvi_ | @anuragshah_ | #NewsBreak pic.twitter.com/vomakKerCP

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Earlier, the Department of Financial Services (DFS) under the Ministry of Finance had said that there will be a 10 per cent quota for existing policy holders at the time of the launch. The market regulator said that it considered even this as a wrong practice, Shah further said.