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SAT refuses relief to lenders in Karvy case

The tribunal asked these companies to approach Sebi by December 6 with their pleas.

ETMarkets.com|
Updated: Dec 04, 2019, 03.27 PM IST
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SAT on Tuesday in an interim order had asked NDSL not to transfer any more shares to the clients of the crippled broker.
In a setback to the lenders, the Securities Appellate Tribunal (SAT) on Wednesday refused to give any further relief to HDFC Bank, ICICI Bank, Bajaj Finance and Indusind Bank in Karvy Broking share pledge case.

The tribunal asked these companies to approach Securities and Exchange Board of India (Sebi) by December 6 with their pleas. It directed the markets regulator to pass an order in the matter by December 12.

These financial institutions had moved SAT to appeal against NSDL's Monday move to transfer shares from now-banned Karvy Broking back to 83,000 clients, which helped almost 90 per cent of the demat account holders of the brokerage to recover their investments.

SAT on Tuesday in an interim order had asked NDSL not to transfer any more shares to the clients of the crippled broker.

Karvy had allegedly misused securities of over 95,000 clients, which it was holding on behalf of the clients to raise over Rs 600 crore in loans to fund its real estate arm.

Following an order from Sebi, National Securities Depository (NSDL) on Monday transferred back stocks of nearly 83,000 clients.

Bajaj Finance was the first to challenge NSDL move at the SAT within hours of the transfers, and the banks joined it on Tuesday.

Banks claimed that such "unilateral" transfer of shares, which are pledged with them as securities for borrowings, will deeply impact the entire business of loans against shares and will prevent them from undertaking this business in toto.

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