HYDERABAD/MUMBAI : The Securities Appellate Tribunal in an interim order on Tuesday asked the National Securities Depository Ltd (NSDL) to halt transfer of any more shares to clients of Hyderabad-based Karvy Broking. On Monday, NSDL had transferred securities worth Rs 2,014 crore to 82,599 clients of Karvy, while it hoped to transfer the remaining after customers clear dues with Karvy. While NSDL’s actions brought relief to clients who had accounts with Karvy Stock Broking, experts said the action of releasing the shares would have larger repercussion across the board for lenders in the segment.
Given the large number of investors whose shares have been illegally pledged by Karvy to take bank loans, experts said the ruling favouring banks and neglecting investors is likely to be challenged. The interim stay came after three more lenders — ICICI Bank, IndusInd Bank and HDFC Bank — knocked the doors of SAT claiming ownership of the securities Karvy had pledged with them.
The banks join NBFC Bajaj Finance, which called in Karvy’s loans last month. It also reserved orders against fresh petitions filed by the banks for Wednesday. SAT directed markets regulator Sebi to hear the lender’s views by December 4, and pass an order by December 10. According to NSE’s preliminary probe, Karvy took loans to the tune of `600 crore by pledging securities worth `2,300 crore of 95,000 clients with lenders.
Pressure from lenders
ICICI’s counsel argued that NSDL and Sebi must indemnify the bank against any loss on account of the transfer of pledged shares. HDFC’s counsel said NSDL transferred shares worth `400 crore and unilaterally settled the accounts