IIFL activates 11 lakh frozen Karvy accounts

In December 2019, Karvy's license was suspended by the stock exchanges after it was found that the brokerage firm unauthorisedly transferred securities of clients into one of its Demat accounts.

New Delhi:IIFL Securities on Wednesday said it has begun activation of 11 lakh frozen Karvy Stock Broking's demat accounts and the account holders can now trade or invest on its platform.

IIFL Securities won the official bid to acquire all demat accounts held by Karvy Stock Broking with National Securities Depository Ltd and Central Depository Services Ltd, the brokerage firm said in a statement.

The bidding process which began in early February has finally ended the ordeal of 11 lakh investors of Karvy whose accounts have been frozen for over a year.

The asset under management of these Karvy demat accounts stands at Rs 3 lakh crore.

“It gives me immense pleasure to welcome all Karvy account holders. Now their accounts are officially unfrozen and they can start trading or investing with IIFL Securities," Sandeep Bhardwaj, CEO, Retail, IIFL Securities said.

"As a goodwill gesture, we have waived the first year annual maintenance contract charges on such accounts. Also, trading for the first 30 days through IIFL Markets mobile is free," he added.

In addition, IIFL Securities has created a dedicated web platform as well as number for all Karvy demat account holders to facilitate the re-starting of their demat accounts.

According to the company, this acquisition will catapult IIFL Securities to the position of India's third largest broker in terms of demat accounts after Zerodha and Upstox.

IIFL Securities, which offers investment services across equity, commodities, currency, mutual funds, fixed deposits and other debt products and portfolio management services (PMS), has over 2.3 million retail customers and more than 500 institutional clients.

It is a key player in both retail and institutional segments of the capital market with over 2,500 points of presence across India and provides research coverage on over 225 companies.

On February 6, NSE, BSE and MSE issued a circular to transfer the trading and demat accounts held by Karvy to another member through a formal bidding process.

In November 2019, markets regulator Sebi barred Karvy from taking new brokerage clients after it was found that the firm unauthorisedly transferred securities of clients into one of its Demat accounts by misusing the PoAs (Power of Attorney) given by its clients.

In December 2019, Karvy's license was suspended by the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

In December 2020, the Securities and Exchange Board of India (SEBI) banned the Karvy Stock Broking Ltd (KSBL) permanently after receiving the forensic audit report from the NSE.

The report confirmed that Karvy illegally transferred shares to the tune of more than Rs 2,000 crore.

(PTI)