Sebi rejects Axis Bank's plea in Karvy matter
New Delhi: Markets regulator Sebi has rejected Axis Bank's plea to allow the lender to invoke the pledge on shares in the Karvy Stock Broking Ltd (KSBL) matter.
The order comes after the Securities Appellate Tribunal (SAT) on December 20 had asked Sebi to pass an order by January 15, 2020 in the case. The tribunal had modified its earlier directive passed on December 17, wherein it had asked the markets watchdog to pass an order within 15 days in the case.
Axis Bank had moved SAT seeking the shares pledged by KSBL to the lender be unfrozen, so that it can invoke the pledges. The move had come following a Sebi directive to the National Securities Depository Ltd (NSDL) in November that prevented Axis Bank from accessing the securities pledged with the lender by KSBL.
KSBL owed Rs 81 crore to the bank which was given in the form of overdraft against shares.
As per the data provided by NSE, securities pledged by KSBL in favour of Axis Bank belonged to its fully paid as well as partly or unpaid clients. The value of securities belonging to fully paid client is Rs 171.74 crore and the value of securities of other than fully paid clients is Rs 13.69 crore. Regarding pledging of securities of fully paid clients, Sebi said a stock broker has no authority to pledge the securities of its fully paid clients. If a broker pledges securities of its fully paid clients, it amounts to misappropriation of clients' securities. Sebi, through an interim order passed on November 22, barred KSBL from taking new brokerage clients and also prevented it from using the PoAs given by its clients after the brokerage was found to have allegedly misused clients'