The Cyberabad police has registered a fresh case against KSBL for allegedly duping another bank of Rs 563 crore.
Days after the Hyderabad police arrested and remanded the Chairman and Managing Director of Karvy Stock Broking Limited (KSBL), C Parthasarathy, on charges of cheating and criminal conspiracy in a loan fraud case, the Cyberabad police Tuesday registered a fresh case against KSBL for allegedly duping another bank of Rs 563 crore. The KSBL chief was arrested last Thursday.
Based on a complaint from the manager of ICICI Bank, the Gachibowli police registered a case of cheating and criminal breach of trust against KSBL, Parthasarathy, Managing Director M Yugandhar and others. “Funds raised by KSBL by pledging shares from its six bankers were transferred to KSBL’s own bank accounts, and not into ‘Stock Broker Client Account’, which is in contravention with the Securities and Exchange Board of India (SEBI) guidelines,” said the Cyberabad police.
According to a press release, all pledges on securities were closed without approval, and securities were transferred to end clients of KSBL, thereby, severely impacting the security of all lenders, including ICICI Bank.
The police said the SEBI, in its circular, has directed that the clients’ securities lying with trading members/clearing members cannot be pledged to banks/NBFCs for raising funds. SEBI also specified that the broker should maintain clear segregation of the client beneficiary account and its own beneficiary account.
The investigation found that “KSBL, with the dishonest and fraudulent intention of cheating, by planning criminal conspiracy, in collusion/connivance with other unknown unscrupulous people, if any, had misappropriated the financial assistance for their personal benefit, thereby caused a criminal breach of trust, wrongful loss to ‘ICICI Bank’ with corresponding wrongful gain to themselves, thus committed the fraud with the ‘ICICI Bank’ and the fraud amount involved total principal outstanding of 5.63 billion or Rs 563 crore.”
The case is being investigated by a special team that was formed for investigation of the case in the Economic Offences Wing of Cyberabad police.
Earlier, the Detective Department of the Hyderabad Police’ Central Crime Station registered a case against M/s Karvy Stock Broking Pvt Ltd Hyderabad for defaulting repayment of a loan Rs 137 crore availed from IndusInd Bank’s Hyderabad branch. The bank has alleged that the credit was availed by pledging securities/shares and personal guarantee of Chairman & MD Parthasarathi, by suppressing facts that the pledged securities belong to the clients, and were used without their consent by misusing power of attorney.
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