[ by Kavita Krishnan ]The Securities Appellate Tribunal (SAT) refused to give any further respite to HDFC Bank, ICICI Bank, Bajaj Finance and Indusind Bank in the Karvy Broking share pledge case. The tribunal had asked these financial institutions to approach markets regulator Securities and Exchange Board of India (SEBI) by December 6 with their pleas and had directed the SEBI to pass an...
The Securities Appellate Tribunal (SAT) refused to give any further respite to HDFC Bank, ICICI Bank, Bajaj Finance and Indusind Bank in the Karvy Broking share pledge case. The tribunal had asked these financial institutions to approach markets regulator Securities and Exchange Board of India (SEBI) by December 6 with their pleas and had directed the SEBI to pass an order in the matter by December 12.
These banks and financial institutions had moved SAT to appeal against NSDL’s (National Securities Depository Limited) move to transfer shares from the now-banned Karvy Broking back to 83,000 clients, which helped almost 90 % of the demat account holders of the brokerage to recover their investments.
SAT passed an interim order and asked NDSL not to transfer any more shares to the clients of the troubled broker.
Karvy had allegedly misused securities of over 95,000 clients, which it was holding on behalf of the clients to raise over Rs. 600 crore in loans to fund its real estate arm. As a result of the SAT order, NSDL transferred back stocks of nearly 83,000 clients. Bajaj Finance was the first to challenge NSDL move at the SAT within hours of the transfers, and the banks joined it soon after.
According to the financial institutions, such unilateral transfer of shares, which are pledged with them as securities for borrowings, will deeply impact the entire business of loans against shares and will prevent them from undertaking this business as a whole.