Sebi disposes of case against IDBI Bank

Markets regulator Sebi today closed a case related to disclosure lapses against state-owned IDBI Bank in the matter of Sankhya Infotech Ltd (SIL).
The Securities and Exchange Board of India (Sebi) had conducted an inspection into irregularity in the share-trading of SIL and into the possible violation of various provisions during the period from August 1, 2014 to January 31, 2015 by IDBI Bank.
The regulator had observed that IDBI had invoked pledge of 14,91,209 shares reflecting 13.26 per cent of the total issued capital of SIL, which is tantamount to acquisition of shares, without making disclosures to stock exchange and company as required under SAST (Substantial Acquisition of Shares and Takeover) Regulations and violated the same.

Thereafter, Sebi had initiated adjudication proceedings against IDBI.
According to the Sebi order, five promoters of SIL had pledged 14,91,209 equity shares through an agreement dated August 23, 2013 in favour of IDBI as security for sanction of financial assistance of Rs 28 crore to the firm by the bank.
In its order, Sebi said IDBI had invoked the pledged shares of promoters and subsequently, after due internal approvals, sold them in the market and adjusted the sale proceeds towards outstanding loans of SIL.

The actions of IDBI to invoke pledge and thereafter selling them were in accordance with the terms of pledge agreement dated August 23, 2013 to secure their debts in ordinary course of business as a scheduled commercial bank, the regulator added.

SAST Regulation exempts a scheduled commercial bank as pledgee to make disclosure provided that pledge invoked was only for the purpose of securing indebtedness in ordinary course of business.
Finding merit in the submission of IDBI that the shares pledged by the promoters of the SIL were acquired and invoked by it, being a scheduled commercial bank, to secure the indebtedness in the ordinary course of business, Sebi disposed of the case.