Amitabh Chaturvedi, a veteran of the banking & financial services industry who was brought in to steady the ship at scam-hit Karvy Group as its CEO for financial services operations, has put in his papers. Chaturvedi had joined the Hyderabad-headquartered business house in December 2019. He resigned from his executive role in January this year and is currently on the boards of three of the Karvy group companies as non-executive director.
Chaturvedi's resignation letter, submitted by Karvy Stock Broking (KSBL) to the Registrar of Companies (RoC), Hyderabad, is dated January 14, 2021. “I hereby submit my resignation from the post of Chief Executive Officer-Financial Services businesses and Key Managerial Personnel (KMP) of the company, in terms of the provisions of the Companies Act, 2013, and the rules issued thereunder, with effect from January 14, 2021,” Chaturvedi said in his resignation letter addressed to the board of directors of KSBL.
Sources said that while he has resigned from the post of CEO & KMP in the financial services businesses, he has been asked to continue on the boards of three Karvy group entities, in a non-executive role.
He is on the boards of Karvy Capital, the group’s asset management arm, Karvy Financial Services, the NBFC focused on providing financial support to MSMEs and Karvy Investor Services, the entity that offers investment banking and advisory services.
At the same time, C Parthasarathy, chairman, Karvy Group denied that Chaturvedi had quit. “No, he has not resigned from the services of the company. He has stepped down as KMP. He continues to be in the employment of the company as head of the financial services business and a CEO, not being a KMP,” Parthasarathy said. He also denied that Chaturvedi was serving his notice period at the group.
Chaturvedi’s appointment was announced by Karvy Group on December 31, 2019, as part of a corporate restructuring exercise ostensibly aimed at cleaning up the house after the demat account scam by KSBL came to light in late November 2019.
The rejig came a little over a month after stock market regulator Sebi banned Karvy Group flagship KSBL for pledging securities of its clients with lenders without permission from those very clients, to raise funds. This was a violation of the then newly introduced Sebi rules that had kicked in on October 1, 2019.
KSBL had pledged securities of around 95,000 clients to raise over Rs 2,300 crore from various banks and financial institutions including ICICI Bank, HDFC Bank, Bajaj Finance, Aditya Birla Finance, Axis Bank and IndusInd Bank.
Chaturvedi was brought in to clean up the mess at the group’s financial services operations. Before joining Karvy, Chaturvedi, over a span of three decades, had worked with Essel Group, Dhanalakshmi Bank, Reliance (now Nippon) Mutual Fund and ICICI Bank.
To come out of the bad phase, Karvy had plans to sell off some of its assets to generate funds to pay off its loans, release the pledged shares and pay back the same to KSBL’s clients. As part of this plan, it sold off its minority stake in Karvy Fintech, one of the leading register & transfer agents for the mutual fund industry. The company has since been renamed KFin Tech and is now majority-owned by global PE player General Atlantic.
However, Karvy’s plans to monetise other assets failed and as a result to recover part of its dues, all the demat and trading accounts of KSBL’s customers were auctioned off to IIFL Securities and Axis Securities. NSE and BSE have also expelled the company.