Karvy Stock Broking Ltd, which is under regulatory scrutiny for alleged misuse of client securities and failing to honour investor payouts, is in active talks to sell stake to meet a shortfall in dues to banks and investors.
The broking firm is facing a shortfall of ₹678 crore in dues to banks and investors, the Securities and Exchange Board of India told journalists after a board meeting of the regulator on Monday
Karvy has informed the National Stock Exchange (NSE) that it is has signed a term sheet to sell a stake in one of its firms. The broking firm will use these funds to clear the dues to investors by the end of March, said Sebi chairman Ajay Tyagi.
On 22 November, Sebi had barred Karvy from acquiring new clients and using power of attorney, thus preventing the company from trading on behalf of clients, after the broker allegedly used client money for other purposes and indulged in unauthorized trade. Karvy had pledged shares belonging to clients and used them to raise funds.
Karvy’s dues total ₹1,189 crore, including ₹694 crore in securities and ₹495 crore in cash, according to Sebi. Out of this, only ₹511 crore is available, leaving a shortfall of ₹678 crore.
NSE is awaiting a forensic audit on Karvy and is yet to label the firm as a defaulter.
The market regulator also introduced another step to prevent unauthorized pledging of shares. Under the new regulations, even re-pledging of securities to meet margin requirement or settlement obligations would fall under the definition of a pledge.
