SAT Asks Sebi to Pass Order in Karvy Broking Case by January 15 on Axis Bank's Plea

New Delhi: The Securities Appellate Tribunal on Friday asked Sebi to pass an order by January 15 next year in Karvy Broking matter on Axis Bank's plea that the regulator's ruling is preventing it from accessing securities pledged by the broking firm through another account.

The tribunal modified its earlier directive passed on December 17, wherein it had asked the markets watchdog to pass an order within 15 days in the case.

Axis Bank had moved to the SAT seeking the shares pledged by Karvy Stock Broking Limited (KSBL) to the lender be unfrozen, so that it can invoke the pledges.

The move came following a Sebi directive to the National Securities Depository Ltd (NSDL) in November that prevented Axis Bank from accessing the securities pledged with the lender by KSBL.

KSBL owed Rs 81 crore to the bank which was given in the form of overdraft against shares.

"We modify our order dated December 17, 2019 to the extent that Sebi will pass appropriate orders on the representation of the appellant on or before January 15, 2020," the tribunal said in an order passed on Friday.

Sebi, through an interim order passed on November 22, barred KSBL from taking new brokerage clients and also prevented it from using the power of attorneys (PoA) given by its clients after the brokerage was found to have allegedly misused clients' securities to the tune of over Rs 2,000 crore.

Securities held by KSBL were used by the brokerage for borrowing from the lenders courtesy the PoA.

The securities held by over 83,000 clients were given back to them after Sebi asked NSDL to do so, forcing lenders -- Bajaj Finance, ICICI Bank, HDFC Bank and IndusInd Bank -- to move SAT and secure an interim relief on further transfers. However, SAT on December 4 had refused any immediate relief to top lenders and had directed the four lenders to approach Sebi by December 6 and that Sebi pass an order.

NSDL's move helped 90 per cent of KSBL's demat account holders get back their securities.

Last Friday, Sebi had refused to provide any relief to the four lenders.