HDFC Bank violated SEBI interim order.
Penalty action has been taken against HDFC Bank (HDFC Bank) for violating an interim order of capital market regulator SEBI. HDFC Bank sold some of the mortgaged shares of BRH Wealth Creators bypassing the SEBI order.
- January 21, 2021, 10:14 PM IST
BRH took loan from the bank by pledging securities
HDFC Bank had sold the mortgaged shares of capital market regulator Sebi to recover the outstanding debt from BRH against the interim order dated 7 October 2019. Through an interim order, SEBI directed BRH to discontinue any kind of speeding method in the securities market. Also said that in future, its assets will be used only for payment of money or for delivery of securities. Assets in the directive meant all the assets of BRH, including securities. BRH had taken loans from several financial institutions including HDFC Bank by holding these securities.
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SEBI had instructed the banks not to debit demat accounts and bank accounts of BRH. SEBI found that HDFC Bank raised Rs 158.68 crore on 14 October 2019 by selling the mortgaged securities of BRH. After this, most securities were sold to recover their dues. Explain that HDFC Bank had given a loan of 191.16 crores to BRH and 26.61 crores to BRH Commodities. SEBI said that its interim order was not a final determination of the right of recovery, but its purpose was to stop the purchase and sale of assets of BRH till the completion of investigation or forensic audit.