Sebi cancels merchant bank registration of Karvy Investor Services

Capital markets regulator Sebi on Thursday cancelled the registration of Karvy Investor Services Ltd (KISL) as a merchant banker for breach of eligibility criteria.

The order came after the Securities and Exchange Board of India (Sebi) conducted an inspection of Karvy Investor Services during March 15-17, 2023 and in the onsite inspection, the regulator found that the merchant banker was not functioning or operational both at the registered as well as in the correspondence address.

Subsequently, the regulator had continued the inspection and found that Karvy Investor Services did not have the required infrastructure.

"...by not having necessary infrastructure like adequate office space, equipment etc. and minimum two employees having the experience to conduct the business of merchant banker and having a director who is involved in a litigation connected with the securities market which has an adverse bearing on the business of the applicant and by not being fit and proper person, noticee (KISL) is not meeting eligibility criteria as laid down in....merchant bankers Regulations," Sebi said in its 24-page order.

Additionally, the regulator has not paid the renewal fee for the block from December 13, 2022, to December 12, 2025, it added.

Accordingly, the regulator has cancelled "the certificate of registration...of Karvy Investor Services Ltd". The order comes into force with immediate effect.

In April 2023, Sebi barred Karvy Investor Services from taking new clients for allegedly violating regulatory norms. It had found that KISL neither had any physical infrastructure nor any employee working for it.

Karvy Investor Services was registered as a merchant banker with Sebi in December 2013.