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Karvy: Securities Appellate Tribunal denies relief to private banks

Meanwhile, sources said Karvy approached NSE’s disciplinary committee following the SAT order.

Published: 05th December 2019 12:22 PM  |   Last Updated: 05th December 2019 12:22 PM   |  A+A-

By Express News Service

HYDERABAD: IN a setback to private banks, the Securities Appellate Tribunal (SAT) on Wednesday refused any interim relief against the transfer of securities by NSDL to customers of Karvy Stock Broking Ltd.

Instead, the tribunal asked lenders to approach Sebi by December 6 with a fresh plea. It also directed the markets regulator to refer one of its whole-time members to give a personal hearing to the aggrieved parties and pass an order by December 12.

It may be noted that three private banks — ICICI Bank, HDFC Bank and IndusInd Bank — moved the SAT on Tuesday claiming ownership of the securities, which originally belong to customers of Karvy.
They contended that many of the securities were pledged to borrow money from them and asked the tribunal to either transfer securities to them or freeze them in an escrow account.

Earlier this week, Bajaj Finance first filed a similar petition, which the SAT referred to Sebi, besides putting a freeze on NSDL transferring securities back to customers until further notice. While Bajaj’s outstanding exposure to Karvy stood at Rs 12 crore, ICICI’s was Rs 642 crore, HDFC’s was Rs 350 crore and IndusInd’s was Rs 132.50 crore.

The lenders argued that following the Sebi order, they requested the regulator not to initiate action on transferring shares to clients as they had bona fide rights against them. They informed the tribunal that it was a common industry practice to lend against pledged shares and there was no reason to suspect Karvy’s claim that it owned these shares.

Meanwhile, sources said Karvy approached NSE’s disciplinary committee following the SAT order.
In an order passed on Tuesday, the Securities Appellate Tribunal said Karvy was at liberty to file an appeal under the NSE rules.



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