HYDERABAD: With Karvy Stock Broking Ltd running out of the road, it sought additional time from market regulator SEBI to submit its responses. According to the company, SEBI granted time till January 6, when it will likely pronounce the order.
Following SEBI’s November 22 ex-parte order preventing the firm from adding new customers and barring it from exercising the power of attorney given by its customers, Karvy was expected to submit its responses within a fortnight, i.e., December 16. Since the firm couldn’t meet the deadline, it sought extra time, which SEBI allowed giving the brokerage another fortnight.
It may be noted that Karvy’s plea both with NSE (which suspended its trading licence) and the Securities Appellate Tribunal yielding little or no relief until now. Last Friday, SEBI refused any relief to lenders of Karvy including Bajaj Finance, ICICI Bank, Axis Bank, HDFC Bank and IndusInd Bank to exercise their rights on pledged securities.
SEBI contended that all pledged shares with banks came from client accounts and that the lenders failed to conduct proper due diligence. While extending a loan against shares the banks failed to notice that the bulk of pledged shares did not come from ‘proprietary account’ but from ‘nonhouse’ account.