Karvy Case: SAT Asks SEBI To Pass Order By Jan. 15 On Axis Bank’s Plea
The Securities Appellate Tribunal on Friday asked the Securities and Exchange Board of India to pass an order by Jan. 15 next year in Karvy Broking matter on Axis Bank Ltd.'s plea that the regulator's ruling is preventing it from accessing securities pledged by the broking firm through another account.
The tribunal modified its earlier directive passed on Dec. 17, wherein it had asked the markets watchdog to pass an order within 15 days in the case.
Axis Bank had moved to the SAT seeking the shares pledged by Karvy Stock Broking Ltd. to the lender be unfrozen, so that it can invoke the pledges.
The move came following a SEBI directive to the National Securities Depository Ltd. in November that prevented Axis Bank from accessing the securities pledged with the lender by Karvy Stock Broking.
Karvy Stock Broking owed Rs 81 crore to the bank which was given in the form of overdraft against shares.
"We modify our order dated Dec. 17, 2019 to the extent that SEBI will pass appropriate orders on the representation of the appellant on or before Jan. 15, 2020," the tribunal said in an order passed on Friday.
SEBI, through an interim order passed on Nov. 22, barred Karvy Stock Broking from taking new brokerage clients and also prevented it from using the power of attorneys given by its clients after the brokerage was found to have allegedly misused clients' securities to the tune of over Rs 2,000 crore.
Securities held by Karvy Stock Broking were used by the brokerage for borrowing from the lenders courtesy the PoA.
The securities held by over 83,000 clients were given back to them after SEBI asked NSDL to do so, forcing lenders -- Bajaj Finance, ICICI Bank, HDFC Bank and IndusInd Bank -- to move SAT and secure an interim relief on further transfers. However, SAT on December 4 had refused any immediate relief to top lenders and had directed the four lenders to approach SEBI by Dec. 6 and that SEBI pass an order.
NSDL's move helped 90 percent of Karvy Stock Broking’s demat account holders get back their securities.
Last Friday, SEBI had refused to provide any relief to the four lenders.