SAT halts NSDL from transferring more shares to Karvy clients

Our Bureau Mumbai | Updated on December 03, 2019 Published on December 03, 2019

Clearing house can’t transfer shares as they are pledged in our favour, claim banks

The Securities and Appellate Tribunal (SAT) has restricted depository participant NSDL from transferring balance shares lying in Karvy’s demat account to its clients. On Monday, NSDL said that it had transferred shares lying in Karvy’s account to around 82,500 clients of the brokerage.

Lender including banks and financial institutions had approached SAT against NSDL’s move to transfer shares in Karvy’s demat account to clients. The banks say Karvy had pledged these shares in their favour.

NSDL told SAT that it was only following the directions of SEBI and had transferred the shares to its legitimate owners. NSDL further said that they called for a board meeting to take a view on SEBI’s order and that Karvy case was a fraud and not a routine matter. NSDL also told SAT that banks did not follow RBI circular (on lending).

According to sources close to market regulator SEBI, the rough estimates of shares transferred to the respective clients of Karvy stood at around ₹2,000 crore. As on October 1, KSBL had around 1,33,000 clients who had their securities lying with the brokerage house. There were around 90,000 clients who still had their securities in Karvy’s account when SEBI issued its partial ban order on November 22. The value of these securities was then around ₹2,800 crore, the sources said.

SAT decision came after Bajaj Finance challenged SEBI’s decision to return to Karvy’s clients the securities that the broking house had illegally pledged to raise money for itself. The tribunal further directed SEBI to hear out the lender’s concerns by December 4 and pass an order by December 10.

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Published on December 03, 2019
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