Edelweiss Custodial Services has approached the High Court of Bombay claiming outstanding dues to the tune of Rs 100 crore from IndiaNivesh Shares and Securities Pvt. The matter is likely to be heard on April 30.
In an earlier statement to the exchanges, IndiaNivesh said, "There have been mark-to-market losses, which has been funded by Edelweiss Custodial Services and Edelweiss Custodial Services was covered with STL which was available for the credit balances of clients."
They requested the exchanges to freeze all collaterals including bank guarantees, short term loans (STL) and other amounts available with exchange(s) and their clearing member: Edelweiss Custodial Services. They stated that the amount would "be enough to cover the creditors of IndiaNivesh."
IndiaNivesh declined to comment on the matter.
On April 2, IndiaNivesh has shut down its stock broking services amid a credit freeze and unanticipated liquidity crunch in the market due to the novel coronavirus, or COVID-19, pandemic. It stopped taking on any new clients or fresh orders/transactions, or positions from existing clients.
In a statement, it had said that the ongoing coronavirus pandemic, coupled with the lockdown, has led to an unprecedented fall in the markets and has brought economic activity in the country to a grinding halt. Due to the credit freeze in the market, the firm said that they are unable to raise funds from financial institutions and banks, which makes the situation ‘unfavourable’.
IndiaNivesh is a SEBI-registered stocks and commodity broking entity. The brokerage firm had been in the business for over 14 years.
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