Three FPI accounts owing Adani Group shares worth Rs 43,500 crore frozen by NSDL

The National Securities Depository Limited (NSDL) has taken action against three foreign funds that possess shares in four listed Adani Group firms for a total of Rs 43,500 crore.

According to the depository's website, the NSDL has frozen the accounts of Albula Investment Fund, Cresta Fund, and APMS Investment Fund on or before May 31st. As a result of the action, the funds will be unable to sell any existing securities or purchase any new securities.

As per a report in The Economic Times, officials at custodian banks that handle international investors believe the three accounts were frozen due to insufficient disclosure of information about beneficial ownership under the Prevention of Money Laundering Act (PMLA).

Custodians normally notify customers of such actions, but if the fund does not reply or fails to comply, the accounts might be frozen.

The news is a setback for billionaire businessman Gautam Adani, whose firms have seen a dizzying climb in the domestic stock market since last year. Following the news of the event, shares of the group's six listed firms plunged on the stock market.

The Adani Group is yet to make a remark on the situation. All three Mauritius-based funds are registered with the Securities and Exchange Board of India (SEBI) as foreign portfolio investors (FPIs).They are registered at the same Port Louis location and do not have websites.

They together hold 6.82% of Adani Enterprises, 8.03% of Adani Transmission, 5.92% of Adani Total Gas, and 3.58 percent of Adani Green.

The capital markets regulator has updated the FPIs' know your customer (KYC) documentation. Funds had been granted until 2020 to implement the new rules. If they failed, their demat accounts would be frozen.

The regulator requested more information from FPIs, including as declarations on common ownership and personal information for key personnel.