Sharp fall in trading turnover due to investor apathy, resulting from a 50 per cent fall in benchmark stock indices this year, is forcing brokerage houses to shut down branches, mostly franchises, and retrench employees.

To combat costs, leading brokerage houses have also been forced to cut salaries and have already stopped increments and bonuses.

At least 500 branches, including franchises, have been closed since the market meltdown began in January-end this year. Over 5,000 employees, most of them customer-facing executives in the middle and entry level, are believed to have lost their jobs.

Employees, who did not want to be named, confirmed retrenchments and branch shutdowns. Officials of brokerages, however, were in a denial mode, playing down cost-cutting steps such as closure of branches they had taken.

Daily combined turnover on the country's two premier stock exchanges — the BSE and the NSE — has now almost halved from about Rs 90,000 crore in early January this year.

This has resulted in loss of business for brokerages. Brokerages such as Angel Broking, Motilal Oswal Financial Services, Sharekhan, India Infoline, Karvy Stock Broking, Indiabulls Securities, Religare Securities and Anand Rathi Securities serve retail clients. Consequently, some of those brokerages have been hit hard. Institutional brokerages such as Kotak Securities and Edelweiss Securities have also been impacted marginally.

Harshad Apte, vice-president (communications), India Infoline, said there has been a “marginal” reduction in branches in the quarter ended September 30. He said the brokerage also plans to close down some more branches this quarter due to a sharp fall in turnover. “We started business at the worst of the crisis during the dotcom bubble period. Hence, we are better equipped to face the worst,” he said.

India Infoline has also “re-configured” the compensation scheme for its employees. Besides, confirmation of employees is done based on performance, Apte said.

People in the brokerage business said India Infoline has closed down 80 to 100 branches, including franchises. A senior company official, however, maintained that the brokerage has closed down only 12 branches in the quarter ended September 30 and another 10 are up for closure this quarter. The brokerage is present in close to 900 locations in India through its branches and franchises.

Sharekhan, which focuses on retail customers through about 800 branches, is also facing the heat of market meltdown. According to people familiar with the matter, the Mumbai-based brokerage has closed 50 to 60 branches, including franchises, across India. Out of these, seven to eight branches have been closed in Kerala alone. A company official, however, said that only 10 to 15 braches have been closed.

Sharekhan has also slashed salaries of employees, who are earning less than Rs 2.4 lakh per month, by 5 to 15 per cent. The wage cut has been implemented as per the salary slab, an employee working with the brokerage said. Employees who were earning more than Rs 6 lakh per month have been impacted the most and have seen 15 per cent reduction in their pay package.

In response to a detailed questionnaire sent by Financial Chronicle, Sharekhan spokesperson said as per the company policy, he would not like to comment on the issue.

Delhi-based Religare Securities, which went on an aggressive expansion drive after its initial public offering (IPO) last year, is also facing a tough time. To increase trading volumes, the company has asked its customer relationship executives in Gujarat to work even on Sundays.

“The situation is very bad. I fear I will lose my job,” a Gujarat-based employee said on condition of anonymity.

A spokesperson for Religare Enterprises denied any shutdowns or retrenchments. “We have bought the UK’s Hichens Harrison & Co Plc. We bought Lotus Mutual Fund and we are going in for a rights issue. There is no problem whatsoever,” she said.

(With inputs from Shilpa Shree and Rupesh Janve)