Banks With Exposure To Karvy Likely To Approach SAT Or High Court Seeking The Ownership Of Their Clients’ Shares
[ By Bobby Anthony ]Banks which have exposure worth Rs 1,415 crore in fund based exposure to Karvy Stock Broking have made representations that they should be allowed ownership of their clients’ shares.However, the Securities and Exchange Board of India (SEBI) is unlikely to consider their request.Taking into account the SEBI’s position on the matter, banks are in the process of exploring...
Banks which have exposure worth Rs 1,415 crore in fund based exposure to Karvy Stock Broking have made representations that they should be allowed ownership of their clients’ shares.
However, the Securities and Exchange Board of India (SEBI) is unlikely to consider their request.
Taking into account the SEBI’s position on the matter, banks are in the process of exploring all legal options including approaching the SAT or even a high court appeal, since the rights of banks are not being protected.
According to charge sheet documents filed with the Ministry of Corporate Affairs, banks with exposure to Karvy include ICICI Bank (Rs 875 crore), HDFC Bank (Rs 195 crore), IndusInd Bank (Rs 105 crore) and Aditya Birla Finance (Rs 100 crore).
It may be recalled that on November 22, the SEBI had barred Karvy from acquiring new clients and using power of attorney, thereby barring it from trading on behalf of clients, after the broker allegedly transferred clients’ money for other purposes and indulged in trade not authorized by them.
Incidentally, the lawyer representing the Securities and Exchange Board of India (SEBI) at the Securities Appellate Tribunal (SAT) has stated that as per a forensic audit, the misuse of client securities by Karvy Stock Broking Ltd has been estimated at Rs 2,800 crore, which is 40% more than an earlier estimate of Rs 2,000 crore.