NSDL settles Sebi proceedings for ₹15.6 crore over alleged lapses

NSDL has paid Rs 15.57 crore to settle Sebi adjudication proceedings over alleged delays in promoter holding freezes, outsourcing issues, BSDA conversions and handling of client securities

The Securities and Exchange Board of India (Sebi) has settled adjudication proceedings against National Securities Depository (NSDL) after the depository agreed to pay Rs 15.57 crore to resolve alleged violations relating to freezing of promoter holdings, outsourcing arrangements, Basic Services Demat Accounts (BSDA) and handling of client securities, arising from an inspection of its operations during FY 2023-24.

 

What were Sebi’s allegations against NSDL? 

The market regulator had alleged delays and deficiencies in the way NSDL implemented exchange and Sebi directions on freezing and unfreezing promoter shareholdings. The regulator had also cited concerns over NSDL’s outsourcing practices, including backdating of agreements and delayed renewal of a core information technology (IT) outsourcing contract, as well as lapses in ensuring timely conversion of eligible demat accounts into BSDAs or obtaining opt-out confirmations from investors.

 

What is the background to the settlement? 

Sebi issued a show-cause notice in October 2024 to NSDL, following which the depository filed a settlement application under the Settlement Regulations, without admitting or denying the findings. As per the terms of settlement, the depository also made submissions with respect to the action taken against then ‘officers-in-default’.