Capital markets regulator SEBI on Wednesday sent notices to stock exchanges BSE and NSE asking them to pay over Rs 5 crore in a case related to Karvy Stock Broking Ltd (KSBL) and warned of attachment of assets and bank accounts if they fail to make the payment within 15 days.
The notices came after the exchanges failed to pay the fine imposed on them by the Securities and Exchange Board of India (SEBI).
In an order on April 12, the SEBI had slapped a penalty of Rs 3 crore on BSE and Rs 2 crore on NSE for “laxity” on their part in detecting misuse of clients’ securities by KSBL.
The matter relates to KSBL misutilising client securities worth Rs 2,300 crore, belonging to more than 95,000 clients, by pledging them from just one demat account. The funds raised against the pledge were used by KSBL for itself and its group entities.
KSBL and its group entities utilised this money for raising Rs 851.43 crore from eight banks/NBFCs.
In two separate notices, the SEBI directed BSE and NSE to pay Rs 3.09 crore and Rs 2.06 crore respectively, along with further interest, all cost, charges and expenses within 15 days.
These amounts include penalty, interest from April 12 till date and recovery cost.
In the event of non-payment of dues, the markets regulator will recover the amount by attaching and selling the exchanges’ moveable and immoveable properties. Besides, the bourses face attachment of their bank accounts.
Also, the regulator takes the route of arrest and detention in prison to recover the amount.