Business

Karvy Group under SEBI scanner after delayed payouts to clients

Rule book: According to SEBI guidelines, the client should get
the money on the second day from the day of trade. Reuters

Rule book: According to SEBI guidelines, the client should get the money on the second day from the day of trade. Reuters  

more-in

Firm cites technical issues, says it’s working on auto payout for online customers

The Securities and Exchange Board of India (SEBI) has begun an initial inquiry based on reports that Hyderabad-based Karvy Group is facing liquidity issues even as the financial services entity clarified that the delay in payouts to certain clients was only due to technical issues.

Karvy Group has been in the news over the last few days after its equity clients took to social media to air their grievances over delayed payouts.

Incidentally, some of the clients alleged that they had not received the payout even though more than a week had passed since trading.

According to SEBI guidelines, the payouts should happen on a T+2 basis, which means that the client should get the money on the second day from the day of the trade.

While the market has been abuzz with talks of a liquidity crisis at Karvy, the company on Tuesday said that the delays were only on account of technical issues and that it was in the “process of enabling T+2 auto payout for all online customers to eliminate manual payout process.”

“In the month of October 2019, we have had some technical issues in reconciliation between ledger postings and bank payout file creation process. This issue has led to some delays in giving payouts to some customers who have asked for payouts,” Karvy said in a statement in response to a query from The Hindu.

SEBI, however, has taken note of the developments and is examining the matter to ascertain if there were any lapses in terms of risk and settlement mechanisms by Karvy Stock Broking, a person familiar with the development said. An email query sent to SEBI remained unanswered till the time of going to press.

Meanwhile, Karvy has denied that it is facing any liquidity crisis and added that it had the “wherewithal” to settle the dues, which it had been doing consistently.

“Some of the codes would have been missed out during reconciliation process [and] are being processed and settled, we wish to bring to your notice that such unreconciled customers would be less than 50 to 60 unique customers a day,” said Karvy.

“We are building processes to ensure that such unreconciled cases are reconciled the very next day, instead of the existing reconciliation process which is being done on a monthly basis,” it added.

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In the seventh para, Kotak was mentioned instead of Karvy. It has been changed.

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Printable version | Dec 8, 2019 4:41:17 PM | https://www.thehindu.com/business/karvy-group-under-sebi-scanner-after-delayed-payouts-to-clients/article30019580.ece

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