The Congress in Rajya Sabha on Tuesday said steps being taken by multiple regulatory authorities in cases related to alleged fraud at Karvy Stock Broking (KSBL) and DHFL could be "legally questionable" and the government should work with regulators to fix the problem.
Karvy is under regulatory lens for allegedly misusing securities of over 95,000 clients which it was holding to raise over Rs 600 crore in loans.
Debt-ridden mortgage firm DHFL, through layers of shell companies, has allegedly siphoned off Rs 31,000 crore out of total bank loans of Rs 97,000 crore.
Raising the issue during Zero Hour in the Upper House, Congress member M V Rajeev Gowda said, "We have had crisis created at KSBL and we have also seen similar activities with DHFL. ...At a time we want to draw more investment, we are seeing a situation where people are turned off from the market. It is important for regulatory authorities to pro- actively fix these problems."
Instead, multiple regulatory authorities are jumping in and taking preemptive measures, he said and added, "They may be urgent measures but legally questionable. This is another problem."
If these cases get struck in litigation, getting access to funds will become a real problem for customers, he said.
"I urge the government to work with regulatory authorities to help fix these problems and ensure that customers and investors' interest is not hurt. Need of the hour is to revive investors' sentiment," he added.
On the Karvy fraud case, Gowda said when customers sign up for brokerage firms, they give a power of attorney for them to indulge in transactions on their behalf.
"These have been misused and the money which should have been returned to customers has been kept and diverted to other activities like real estates. This has caused hardships to lakhs of investors," he added.