Over a month after it was barred by the Securities and Exchange Board of India from taking new clients for misusing clients' securities, the troubled Karvy Group on Tuesday announced corporate restructuring to separate non-financial businesses from the financial ones.
It has also appointed Amitabh Chaturvedi, who used to head private sector lender Dhanlaxmi Bank, as the company's group chief executive for financial services.
SEBI, through an interim order passed on Nov. 22, barred Karvy Stock Broking Ltd. from taking new brokerage clients and also prevented it from using the power of attorneys given by its clients after the brokerage was found to have allegedly misused clients' securities to the tune of over Rs 2,000 crore.
Securities held by Karvy Stock Broking were used by the brokerage for borrowing from the lenders courtesy the PoA.
This led to widespread anxiety in the financial system, starting with the nearly 1 lakh clients whose securities were pledged and also among the banks, who had lent against the securities to Karvy.
Karvy Group Chairman G Parthasarathy said Chaturvedi has been mandated to "completely overhaul the governance processes, ensure best practices and to bring in greater fiduciary discipline" to the business, according to an official statement.
Chaturvedi hinted at fundraising plans being in the offing and said that the leadership team will work on strengthening the brand.
A statement said stock broking, wealth management, commodities trading and investment banking will come under the financial services vertical, while the other vertical will comprise data management services, data analytics, market research and allied businesses.
Details of who will be heading the non-financial services vertical were not shared by the Hyderabad-based company.
Apart from Dhanlaxmi Bank, Chaturvedi has worked Reliance AMC, ICICI and the Essel Group, according to the statement.
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