Karvy fiasco: NSDL's decision to transfer securities puts lenders in a spot

NSDL has transferred securities, against which loans were given, to clients

The decision of National Securities Depository (NSDL) to transfer securities from Karvy Broking’s demat accounts to client accounts has caught lenders on the wrong foot.

While the depository’s move is to safeguard investors, it has jeopardised the interests of the lenders, who had given loans to Karvy with the same shares as collateral. 

“According to the directions of Sebi (Securities and Exchange Board of India) and under supervision of the NSE (National Stock Exchange), securities have been transferred from the demat account of Karvy Stock Broking to the demat accounts of respective clients who have paid in full against these