What’s the case related to Karvy, which was declared a defaulter by NSE?
Team Udayavani, Nov 26, 2020, 11:14 AM IST
The National Stock Exchange has declared Karvy Stock Broking Ltd as a defaulter and expelled it from its membership.
Once a trading member is declared a defaulter, a stock exchange can pay the clients from the investor protection fund (IPF) kitty.
Karvy had transferred securities worth ₹2,300 crore into one of its Demat accounts by misusing the PoAs given by its clients. Karvy had allegedly misused client accounts without informing them, or reporting to the depository or the stock exchange.
The company is alleged to have misused securities belonging to its clients. The total default is said to be in excess of Rs 3,000 crore, making this the largest default by a broker.
According to Business line, In November last year, SEBI had barred Karvy from taking in new clients after it found that the broker had transferred shares worth more than ₹2,300 crore of over 95,000 clients to its own account and further used it to avail bank loans.
Last week, the NSE said it had settled client claims worth ₹2,300 crore. However, several thousand investors are still claiming money from Karvy, regulatory officials said.
Busines Standard reported, the current shortfall is between Rs 400 crore and Rs 800 crore. “There is a dispute between banks and Karvy over securities pledged. If the court rules in favour of Karvy, then the extent of default could be about Rs 400 crore
Around, 90,000 clients of Karvy are yet to get their dues. Of this about, 7,000 have come forward to claim about Rs 230 crore
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