E-Paper
Dabba trading finds foothold in city
DABBA TRADING?the illegal ?parallel stock market?, with its own set rules of trading in commodities and shares?has picked up momentum in Lucknow. The illegal trading platform which involves carrying out ?word of mouth? share transactions with plenty of ?mutual trust? between the broker and the investor is reported to be having a daily turnover in excess of Rs 40 crore in the city of nawabs.
DABBA TRADING—the illegal ‘parallel stock market’, with its own set rules of trading in commodities and shares—has picked up momentum in Lucknow.
The illegal trading platform which involves carrying out ‘word of mouth’ share transactions with plenty of ‘mutual trust’ between the broker and the investor is reported to be having a daily turnover in excess of Rs 40 crore in the city of nawabs.
So what does ‘dabba’ in the trading system mean? The punters say the word ‘dabba’ means an ‘empty box’ which is ‘meaningless’ as the trade is not legalised in the country. The word ‘dabba’ came from the computer screen in stock trading terminals which displays the stock quotes for the investors. Another theory put forward by brokers is that word ‘dabba’ came from the well-known dabbawallas in Mumbai who could deliver goods with accuracy anywhere.
“One cannot stop ‘dabba trading’ in the country simply on account of the fact that the repeated hike announced in service and securities transaction taxes imposed on the investors makes both the brokers and investors resort to such forms of trading”, Sushil Kanodia, President of UP Stock Brokers Association told HT Lucknow Live.
He said ‘dabba trading’ started in Ahmedabad first and later spread to other parts of the country. There is dabba trading in Kanpur and Lucknow too and a few years back income tax raids were conducted on the premises of dabba traders but nothing was recovered in Kanpur, Kanodia added.
In a typical ‘dabba trade’ for example, one would purchase 200 shares and the computer software will register only 20 shares in the market at a trading terminal as a legal transaction and the rest of the shares are traded outside the exchange with entries made in a ledger book. While a particular scrip may be trading at Rs 1,000 at a particular hour at the exchanges, the dabba traders could even sell it at Rs 950 per share to a purchaser while charging 10 per cent commission on the entire deal, say of 100 shares and still make a profit as no taxes are involved to be paid in the system as it is at best…illegal, a prominent city-based broker said.
He added that ‘dabba trading’ had been flourishing in most of the cities in UP with concentration in cities such as Agra, Mathura, Kanpur and now in Lucknow.
“There is much trust involved in the trade and there is little scope of anybody cheating on the transactions. The punters who normally bid on teams and players in the ‘satta bazaar’ become bidders in the ‘dabba trade’ and people who facilitate the trading are the bookies who run the betting racket during cricket and football matches ”, the broker said.
There are bookies in the dabba trade in Lucknow who have served prison terms for other forms of betting and after serving their terms have started the dabba trading business, he added.
