Sebi denies relief to lenders for flouting regulations in Karvy case

Noting that the pledging of shares done by Karvy Stock Broking didn’t have any legal sanctity, the Securities and Exchange Board of India (Sebi) on Friday denied relief to the lenders that had extended loans to the brokerage against securities. 

According to the Sebi order, its June circular had made it clear that clients’ securities lying with a stock broker in “client collateral account” could not be pledged to banks or non-bank financial companies for raising funds.

The circular “directly concerned the business activity” of the lenders and they should have taken appropriate action to ensure its compliance, the order said.

It also