Karvy Investors Start Receiving Their Money from NSE's IPF in Record Time after Broker Expulsion

Investors of Karvy Stock Broking Ltd (Karvy), who had filed claims with the investor protection fund (IPF) of National Stock Exchange (NSE), have started receiving their money back within a fortnight after processing of claims began. Some investors, who have joined Moneylife Foundation's Telegram group have posted messages to share the news.

NSE sources tell us, "We have expedited payments significantly and also made it easier for investors by sharing information proactively to shorten the claim process." On an average, claims are being paid within 12 to 13 days after complete documentation has been submitted.

However, we have observed from Moneylife's Telegram help group for Karvy investors that most people are struggling to understand the process and to file proper documentation.

According to NSE sources, "We have received about 5,200 odd claims up to now of which up to 1,900 had some deficiency. Around 2,000 have been processed and balance are in the pipeline. About 900 are eligible out of above and most, barring a few have been paid. Total paid amount is about Rs24 crores until now".  

Many investors have also reported rejection of claims. Many of these pertain to shares that have been held in pool accounts and there have been no transactions on the exchange and hence, a claim from the Investor Protection Fund is not tenable under its rules.

There are over 480 people on Moneylife's telegram group and it is clear from their feedback as well as numbers available from the exchange that a large number of people will not be eligible for any compensation (or full compensation) from the Investor Protection Fund. Many of these may have to consider legal action against Karvy, which continues to have several group companies operation as market infrastructure institutions or intermediaries.

Although C Parthasarathy, founder chairman of Karvy had initially promised to repay investors and make arrangements for funds, there have been no payments since October. However, Karvy had made part payments  and some transfers before that period to nearly 90 odd investors, before being expelled from the exchange.

Over the past months, Moneylife Foundation has organised two webinars with officials from the NSE's Investor Services Cell (ISC) and the National Share Depository Ltd (NSDL) to help people understand filing processes, where to get data, how to transfer balances from Karvy to other Depository Participants and understand eligibility. (Read: NSE Officials Guide Investors on Filing IPF Claims)

OP Agarwal, an investor of Karvy says, "NSE has transferred Rs16**** against claim, ledger balance of Rs18**** in 15 days. Only futures & options (F&O) Trade. Date of last trade is 27 November 2019."

Another investor Aleem shared message he received from his bank. The message says, "INR1***** credited to your A/c No XX**** on 01/01/2021 through NEFT with UTR CMS********** by NATIONAL STOCK EXCHANGE INVESTOR PROTECTION FUND T, INFO: NATIONAL STOCK EXCHANGE INVESTOR PROTECTION FUND TRUST."

Earlier in November last year, NSE had said that has settled claims worth Rs2,300 crore of as many as 2.35 lakh investors of Karvy. There were claims of investors with a fund balance of up to Rs30,000 have been settled.
 
In a statement, NSE says, "While disciplinary proceedings are underway, funds and securities of approximately Rs2,300 crore belonging to about 2,35,000 investors have been settled so far, with efforts focused on settlement of small investors. Investors with fund balances up to Rs30,000 due from Karvy Stock Broking have been settled." (Read: Karvy Default: NSE Settles Claims Worth Rs2,300 Crore of 2.35 Lakh Investors; More Expected)
 
Karvy Stock Broking was disabled (trading rights withdrawn) on 2 December 2019. NSE says, "In coordination with other market infrastructure institutions (MIIs) and under the guidance of Securities and Exchange Board of India (SEBI), it transferred securities to respective clients, invoked bank guarantees deposited with clearing corporations and liquidated securities held by Karvy group companies." 
 
In November 2019, Karvy had unauthorisedly transferred securities worth Rs2,300 crore of more than 95,000 clients, into its account, by misusing the power of attorney (PoA) given by its clients. 
 
On 22 November 2019, SEBI barred Karvy from taking new clients in respect of its stock broking activities and also prevented it from using the PoA given by clients after the broker was found to have allegedly misused clients' securities. Karvy had, instead of pledging its own shares, pledged shares belonging to clients and utilised them to raise funds. Some of these funds were, in turn, transferred to its sister concerns such as Karvy Realty Ltd.
 
Moneylife Foundation , through its founder trustee, Sucheta Dalal, had shared 136 complaints of investor with Karvy. Of these, over 100 investors had confirmed to us in November that they received their money or shares back from the brokerage – either in full, if it was below Rs20,000, or in part.
 

IMPORTANT NOTE

Moneylife and Moneylife Foundation have done what we could for investors of Karvy. The group on Telegram was closed since none of the 1000+ members wanted to become admins when Moneylife Foundation wanted to stop being in charge. We have done the best we can in terms of hand holding and guidance. Investor/s now need to get together and go to court or SAT.

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    COMMENTS

    vipal13

    2 months ago

    NSE has paid claims to investors of Fairwealth which were older than 90 days, probably this policy they have made for Karvy clients only..

    prasenjit2k1

    3 months ago

    Hi,
    Even i have faced the same story. Defaulter section is denying claim from Investor Protection Fund. I am ready to file a case against all associated parties. Have written to SEBI/ NSE but no response except that they are rejection claim from IPF due to their clause of 90 day transaction which is unfair. Pls let me know how do we form a group and file a case against all parties.

    dishubhatia31

    3 months ago

    My shares are lying in pool account..please help in whatever way you can. I am ready to file legal proceedings

    madhanskumar

    3 months ago

    This is regarding Karvy, and am helping my Motherinlaw's with her karvy account (refund and transfer of DP). I was part of Karvy Investors telegram group, few days back the group became private and i am no longer able to access the group.

    Please advise how i can become part of the group?
    Thanks

    REPLY

    dishubhatia31

    In Reply to madhanskumar 3 months ago

    I have same problem. Is there any new group created?

    karthik_958

    3 months ago

    I claimed the amount from Investor Protection Cell in NICEPLUS for shares held in pool account. I got the following letter from the defaulters section of NSE. What should I do now?


    As per clause 2(d) of SEBI CircularSEBI/HO/DMS/CIR/P/2017/15 dated February23, 2017 regading 'Admissibility of claim for making payment out of IPF in StockExchanges' kindly note that in the event ofd efault by the member, all trasactions executed on the exchange platform shall be eligible for settlement from IPF (subject to maximum limit), subject to the appropirate norms laid down by the Committee. As per the norms laid down by the Member and Core Settlement Guarantee Fund Committee, all the receviables arising out the the trasactions executed prior to 90 days from the data of disablement of the trading rights of the member are not admissible. No trade found for HINDALCO-HINDALCO INDUSTRIESLTD ,TATACONSUM-TATA CONSUMERPRODUCT LTD. hence cliam for these shares are inadmissible"

    Your securities are SHIL-SOMANY HOMINNOVATION LTD subject matter of litigation filed against Karvy Stock Broking Ltd.,pending before Securities Appellate tribunal.The same will be dealt in the manner as maybe directed / specified by the competent court of law.

    REPLY

    prasenjit2k1

    In Reply to karthik_958 3 months ago

    Hi,
    I too received the same comment from NSE Defaulters Committee.
    Planning to file a case with a joint petition and support.
    Pls reach out if the intention is same.

    kuheli4ever

    In Reply to prasenjit2k1 3 weeks ago

    Please count me in case we are planning for a joint petition/legal action. I too have my shares stuck in pool account. You can drop me a note on my email id: [email protected] for further discussion.

    razarakesh

    In Reply to prasenjit2k1 1 month ago

    Hi I also got the same message.I want to join you.9776110538

    paulnavya

    In Reply to prasenjit2k1 3 months ago

    I am also ready to join you 9686449907

    pp01959

    In Reply to prasenjit2k1 3 months ago

    I have also received the same message from NSE w.r.t the complaint for shares in pool account . My number is 9686449907.

    Manojkr.agarwala

    4 months ago

    My client code is 382220. I had some shares in this account. I do not have any other dmat account. I do not want to open any dmat account.
    Can I get entire proceeds by selling the same at current market price.
    .

    munipalle.03

    4 months ago

    I have some shares blocked in Karvy, How do i get them back, how to claim.

    amritsehgal

    4 months ago

    My Karvy client code is 5991741. Karvy is not transfering my 50 numbers Escorts securities to my Dmat account. How can I get these securities in my Dmat account? As per Karvy record these securities are in my holding statement. Kindly help me as I am an old lady of 75years.

    bvsarma25

    4 months ago

    Regarding karvy account 1901015b Bhuvaneshwari and 190188 bvsarma. We are both Senior Citizens. All our savings are blocked, cash balances are not received.We are not able to participate in Hexware Technology, ntpc, TCS, Wipro BUYBACK SCHEME. KINDLY GUIDE US. THANKS

    bvsarma25

    4 months ago

    Regarding karvy

    tlrchandran49

    4 months ago

    I am surprised. The kind of procedure required to file the claim,baffles small retail investors like me. They ask for the yearly ledger, yearly statement of bank transactions and the claim arising from sale 0f which scrip and at what date. People who claim they have received the dues are really great. Why not IPF call the details fro Karvy and arrange refund as per the ledger maintained by Karvy.

    pankajnsanghvi

    4 months ago

    Please help us as my dad has lost all the money and he is in drpression

    pramoddrsai1008

    4 months ago

    Please ,.help me...my investment is blocked in karvy stock broking

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