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SAT dismisses Axis Bank's plea in Karvy case

The tribunal also reserved its order on Axis Bank’ plea challenging NSDL move to keep in abeyance shares pledged by Karvy.

Published: 13th December 2019 10:38 AM  |   Last Updated: 13th December 2019 10:38 AM   |  A+A-

Axis Bank

Axis Bank (Photo | EPS)

By Express News Service

HYDERABAD: In the ongoing Karvy Stock Broking Ltd’s alleged misuse of clients’ securities case, the Securities Appellate Tribunal (SAT) on Thursday dismissed Axis Bank’s plea seeking interim stay on Securities and Exchange Board of India (SEBI) order.

The tribunal also reserved its order on Axis Bank’ plea challenging National Securities Depository Ltd’s (NSDL) move to keep in abeyance shares pledged by Karvy.

On Wednesday, the private lender in a petition filed with the SAT sought quashing and setting aside of NSDL’s move to keep shares in abeyance stating that the move was illegal as it was contrary to applicable laws. It also sought a restraining order against NDSL, SEBI, and CDSL from taking action that will prevent the bank from exercising its pledge over the shares.

ALSO READ: NSE rejects Karvy’s licence suspension plea

Karvy borrowed Rs 100 crore from Axis via an overdraft against shares facility in April. Of this, Rs 80 crore was due for repayment in December, when the bank failed to recover its outstanding dues thanks to NDSL’s move keeping them in abeyance.

According to Axis Bank, the market regulator’s order does not apply in its case as shares pledged by Karvy were held in a different depository participant account, which was not covered under the order.

Others who moved to the SAT include ICICI Bank, HDFC Bank, IndusInd Bank and Bajaj Finance. The tribunal refused any interim relief and directed them to approach SEBI, which is expected to pass the order in the next few days.

ALSO READ: SAT asks NSDL to halt further transfer of Karvy client stocks

It may be recalled that on November 22, SEBI in an ex-parte order barred Karvy from adding new customers besides preventing the brokerage from exercising the Power of Attorney given by clients. The order was based on a preliminary probe by the NSE, which subsequently suspended Karvy’s license putting the brokerage out of business for now.

SAT reserves order on Axis’ plea on NSDL

The Securities Appellate Tribunal (SAT) has also reserved its order on Axis Bank’ plea challenging National Securities Depository Ltd’s (NSDL) move to keep in abeyance shares pledged by Karvy Stock Broking Limited



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  • Hudaf

    NSDL as depository is responsible for safeguarding investors shares deposited in their demat accounts - very similar to how banks are responsible for safeguarding investors money deposited in fixed deposits or savings accounts. NSDL has been extremely lax in transferring shares of tens of thousands of customers to Karvy's proprietary accounts without proper confirmation. What makes more horrifying is NSDL continued to do this even after SEBI's circular prohibiting such transfers. What is further shocking is that NSDL registered pledges against these shares even though it's records clearly showed that they belonged to investors and NOT to Karvy - and hence played a key role in this huge fraud. While SEBI has rightly ordered NSDL to return the shares to the investors
    1 year ago reply
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