Will not allow another Karvy type scam, says Sebi chief

Sebi Chairperson Madhabi Puri Buch said the regulator will not allow another Karvy type incident to take place at any cost. “There will not be another Karvy issue in our capital markets. If another Karvy like instance happens, it will be on our dead bodies,” Buch told reporters at the Sebi headquarters after a board meeting on Wednesday.

The comments came in response to a question that brokerages, especially discount brokers don't make money. She said the data in fact show that they make lots of money. In fact, the largest discount brokerage Zerodha logged a whopping Rs 2,900 crore plus net income in FY22 on a revenue of around Rs 5,500 crore.

The Karvy scam came to light in 2019 when it was known that Hyderabad-based borekerage pledged securities worth Rs 2,300 crore of almost 95,000 clients with three private banks and a large non-banking finance company as collateral to raise loans worth over Rs 600 crore for itself.

Following a probe, Sebi restricted Karvy Stock Broking from taking new clients. The Sebi order said the broking firm misused clients' power of attorney and transferred Rs 1,096 crore to its group company Karvy Realty.