Karvy case | Lenders may approach SAT to access shares pledged by co

Private sector lenders have hired a law firm and may approach the Securities Appellate Tribunal (SAT) to gain access to client shares that Karvy Stock Broking (KSBL) had pledged with them, reports Mint. The lenders, five private banks and an NBFC, have a collective exposure of Rs 1,4150000000 against these pledged shares. They are likely to challenge the Securities and Exchange Board of India (SEBI) order, which termed these pledges as ‘unauthorised’, the paper added. Moneycontrol could not independently verify the report. A source told the publication that lenders would contend the pledges as "bona fide lending activity, as they were against legitimate shares from Karvy’s account." "Lenders are looking to separately approach the regulator with representations of their exposure and details about the securities held. If SEBI does not give us a hearing, then we will look at appealing to SAT," they added. As per an NSE report, Karvy pledged securities over Rs 2,3000000000 belonging to 95,000 clients to raise Rs 6000000000. ICICI Bank with Rs 8750000000 has the biggest exposure, followed by HDFC Bank (Rs 1950000000), IndusInd Bank (Rs 1050000000) and Aditya Birla Finance (Rs 1000000000). "The banks are currently trying to ascertain how much of their exposure is at risk. If some of the loans are associated with misused client securities, this would turn into an NPA. The appeal, when it happens, would be to access the pledges as it is not the lenders’ fault," a second source said.