HDFC Bank fined for wrongly invoking pledged securities

Sebi on Thursday imposed a penalty of Rs 1 crore on HDFC Bank for invoking securities pledged by stock broker BRH Wealth Kreators in violation of the regulator's interim directions.

In addition, the bank has been directed to transfer Rs 158.68 crore along with 7 per cent interest per annum into an escrow account till the issue of settlement of clients' securities is reconciled, Sebi said in an order.

The instant proceedings have essentially arisen on account of non-conformity by HDFC Bank with the directions contained in the interim order issued by Sebi against BRH Wealth Kreators and other entities on October 7, 2019.

Through the interim order, Sebi had directed BRH to cease and desist from undertaking any activity in the securities market and further, its assets would be utilised only for the purpose of payment of money and/ or delivery of securities, as the case may be, to the clients or investors under the supervision of the concerned exchanges or depositories.

As such, the expression "assets" was extended to all properties of BRH, including securities, that were pledged by it against which funds were raised from HDFC Bank and other financial institutions, Sebi noted.

Further, the depositories and banks were directed not to make debits from the demat as well as bank accounts of BRH.

The proceedings were on account of non-conformity by HDFC Bank with the interim order issued by Sebi against BRH Wealth Kreators