Press "Enter" to skip to content

Karvy case: Securities Appellate Tribunal, SAT, grants interim relief to Axis Bank

At the same time it had also rejected the Axis Bank’s plea to allow the lender to invoke the pledge on shares in KSBL issue.

Axis Bank on Wednesday said it had been granted interim relief by the Securities Appellate Tribunal (SAT) in the matter of Karvy Stock Broking (KSBL), which had pledged client securities with the lender. However, Axis Bank was of the view that its case was different from other lenders as in this case there was an underlying client indebtedness.

The interim stay granted by SAT comes after Securities and Exchange Board of India (Sebi) in its order on late Tuesday night said the transfer of unpaid client shares worth Rs 13.69 crore, pledged in favour of Axis Bank by Karvy, could be released if the bank was able to furnish proof of authorisation by each client.

A spokesperson of Axis Bank said, “Axis Bank has filed an appeal before Hon’ble SAT against the Sebi order. The Hon’ble SAT has today granted interim relief to Axis Bank by directing status quo to be maintained on the SEBI Order till further hearing of the matter.”

Sebi, in its Tuesday order, said if Axis Bank was able to show proof of authorisation in respect of securities having value of Rs 13.69 crore belonging to unpaid clients, such securities could be released under supervision of the National Stock Exchange.

At the same time it had also rejected the Axis Bank’s plea to allow the lender to invoke the pledge on shares in KSBL issue.

Market regulator said pledging of securities of unpaid clients required taking of “explicit authorisation” by the stock broker from each such client and in respect of each such pledging.

The representor (Axis Bank) has submitted that the PoA given by the client was sufficient authorisation to create such a pledge.

“However, I do not agree with such interpretation given to the scope of PoA,” said Ananta Barua, whole-time member at Sebi, in its order.

Axis Bank had submitted that the pledge had been created under an Overdraft Against Shares Facility provided by the Bank to KSBL.

In its order Sebi stated that it has been further submitted that as on date, the principal amount of about Rs 80.47 crore and interest, cost charges etc, thereon is outstanding and due to the representor (Axis Bank) from KSBL.

The overdraft facility was claimed to be secured by KSBL by pledging the securities lying in the demat account.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Source: Financial Express