The market watchdog SEBI has penalised Rs1cr on private lender
HDFC Bank concerning BRH Wealth Kreators Limited, for non‐compliance with the Interim Order issued by the authority.
Further, HDFC Bank has been directed to transfer an amount of Rs158.68cr along with interest from October 14, 2019, till date, calculated at the rate of 7% p.a. to an interest bearing Escrow Account in any nationalized bank, by marking a lien in favour of SEBI, until the issue of settlement of clients’ securities (clients of the stockbroker) is reconciled.
In October 2019, Sebi issued an ex parte ad interim order cum show-cause notice against BRH Wealth which restrained the company from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities either directly or indirectly or being associated with the securities market in any manner till further directions.
Also, the interim order directed banks to ensure that no debits are made in the bank accounts held jointly or severally by the company except for payment of money to the clients and investors.
Later, Sebi received a letter in November 2019, from HDFC Bank where the lender stated that the bank has granted credit facilities to BRH & BRH Commodities aggregating to Rs191.16cr and Rs26.61cr respectively.
Further in December 2019, Sebi observed that HDFC granted OD/Loan against securities for Rs87.75cr. However, the regulatory also observed from the information provided by NSE that the bank has invoked securities pledged by BRH to the tune of Rs158.7cr as on October 14, 2019. Sebi in on December 13, 2019, said, "Thus actions of the bank are not in its conformity with the directions given under the interim order."
Sebi's latest order said, "Having regard to the facts and circumstances in the instant proceedings, including the fact that the Noticee had consciously proceeded to defeat the directions in the Interim Order. I am of the considered view that in terms of Section 15HB of Sebi Act, a penalty of Rs1cr be imposed on the Noticee for non-compliance with the interim order."
At around 1.58 pm, HDFC Bank was trading at Rs1447.65 per piece down by Rs25.85 or 1.75% on Sensex.