The Securities and Exchange Board of India (SEBI) in a decisive move has revoked the registration of Karvy Investor Services Ltd (KISL) as a merchant banker due to serious breaches of eligibility criteria. The regulatory action, announced on Thursday, marks a significant development in ensuring compliance within the capital markets.
SEBI Inspection
The market regulator's decision follows an inspection conducted between March 15 and March 17, 2023, revealing alarming deficiencies in KISL's operations. The onsite investigation revealed a stark reality: the merchant banker was non-functional at both its registered and correspondence addresses, failing to meet basic operational standards, as per the SEBI.
Further scrutiny uncovered a lack of essential infrastructure, including office space and equipment, as well as a shortage of experienced staff required for conducting merchant banking operations. Moreover, the SEBI noted the involvement of a director in litigation related to the securities market, a factor detrimental to KISL's standing as a fit and proper entity.
Highlighting KISL's failure to fulfil regulatory obligations, the SEBI clarified the non-payment of renewal fees from December 13, 2022, to December 12, 2025. Consequently, the SEBI has swiftly acted to cancel the certificate of registration for Karvy Investor Services Ltd, effective immediately.
Disciplinary Measures
This action comes on the heels of the SEBI's prior disciplinary measures in April 2023, when KISL was barred from acquiring new clients over alleged regulatory violations. Investigations at that time revealed a lack of physical infrastructure and absence of operational personnel within KISL.
Karvy Investor Services Ltd had been registered as a merchant banker with the SEBI since December 2013, making this cancellation a notable event in the regulatory landscape of India's capital markets.
ALSO READ | SBI Hikes Annual Debit Card Maintenance Charges By Rs 75 On These Cards From April 1