SEBI has penalised HDFC Bank for ₹1 crore, on terms invoking client securities pledged by BRH Wealth Kreators, violating an interim order by the regulator board.
In a probe conducted by SEBI, it was realised that the bank unilaterally invoked securities pledged by BRH Wealth Kreators. On October 14, 2019, the Bank invoked BRH’s pledged securities amounting up to an extent of ₹158.68 crore, thereby, the Bank needs to deposit an equivalent amount plus the interest calculated from October 14, 2019 onwards at the rate of 7% p.a. in another escrow account until the reconciliation of the client’s security settlement claims. HDFC Bank had lent credit worth ₹191.16 Crores to BRH, including LAS worth ₹87.75 Crores.
“Having regard to the facts and circumstances in the instant proceedings, including the facr that the noticee (HDFC Bank) had consciously proceed to defeat the directions in the Interim Order, I am of the considered view that in terms of Section 15HB of the SBI Act, a penalty of ₹1 crore be imposed on the Noticee for non-compliance with the Interim Order,” – SEBI order.
Earlier, SEBI had issued an interim order against few entities including BRH, limiting their access to the securities market and trading of securities, by both direct or indirect means. This notice was issued on October 7, 2019. The addressed entities weren’t allowed to dispose off or alienate assets, movable or immovable, neither were they allowed to create nor invoke or even release any interest/ charge upon these assets. An exception would be after the National Stock Exchange (NSE) grants them the permission to do so.
The concerned entities, which includes BRH as well, had to display their inventory of assets, movable or immovable alongside interest or any other charge or investment on these assets. The concerned details of bank accounts, mutual fund investments and demat accounts need to be provided to NSE and BSE within five days of the order receipt.