Infosys Technologies’ recent generosity to give at least five shares to its employees may

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lead to the opening of around 50,000-60,000 demat accounts in July, or about a third of such accounts opened in the country in a month.

Of the company’s 1,14,822 employees, as of June 30, 2010, about 50,000-60,000 joined the IT major in the past three to four years and most of them do not have a demat account.

The Bangalore-based IT company has asked all employees to submit their demat details by July 31 to avail of the gift. Employees have the option to either take the shares or encash them on the day of receipt, said an employee.

A senior executive of Infosys, who preferred anonymity, told Financial Chronicle that the company had given time till August because many of them did not have demat accounts. “Most of the staff who joined in the last three to four years, about 50,000-60,000 people, are now getting it done through their salary accounts,” the official said.

Though the IT firm has not given a formal mandate to open demat accounts with ICICI Bank, the lender is likely to benefit the most because it has Infosys’ salary accounts.

Earlier this month, Infosys announced that it would reward its employees with at least five equity shares from the Infy Employee Welfare Trust in August to mark its 30th year of operations, which fell on July 2. The company said staff would also be eligible to an incremental allocation of one equity share for each completed year of service.

V Balakrishnan, chief financial officer of Infosys, said the shares were held by an independent trust and it was transferring the shares to employees who were beneficiaries of the trust. “There is no allotment and this is a free transfer of shares. Employees have to give their demat accounts. It is purely left to them and we have no preference to any depositary participant,” he said.

Generally, about 1.5 lakh demat accounts are opened every month in India through banks, brokerages and other institutions. In 2009, around 16 lakh demat accounts were added.

India has more than 1.5 crore demat accounts, of which 75-80 per cent are active. ICICI Bank Demat Services has close to 20 lakh customers, followed by Sharekhan with around 10 lakh. Typically, a depositary participant does not take any charge for opening an account but annual maintenance bills can range from Rs 250 to Rs 800.

Even though ICICI Bank has an advantage, competitors are leaving no stone unturned to woo Infosys employees.

R Kalyanaraman, senior vice-president (sales), Sharekhan, said, “After the development was announced, we proactively approached Infosys employees and have got 2,500 people to open demat accounts related to this scheme in just 15 days. Around 50,000 fresh demat accounts could be opened and if more companies announce these kind of schemes, it could turn out to be a big opportunity for us.”

An ICICI Securities spokesperson said, “While we regret we cannot comment on specific business opportunities, we offer a 3-in-1 account, which facilitates online transactions for almost two million customers that enables retail customers to tie in their savings bank, demat and brokerage accounts electronically.”