Another Bank registers case against Karvy Group Chairman for Rs 563 cr fraud

Hyderabad, Aug 24 (UNI) : Few days after the arrest of the scam-hit Karvy Stock Broking Ltd (KSBL) Chairman C Parthasarathy by the city police based on a loan default complaint by IndusInd Bank, another similar case was registered against the Chairman and others by the ICICI bank.

Based on a complaint by the ICICI bank Manager, the Gachibowli Police on Monday registered cheating fraud and criminal breach of trust under various sections of Indian penal Code against Parthasarathy, Yugandhar and others, the Cyberabad police said in a release.

The Chairman was arrested here on Thursday last for defaulting on a loan taken from the IndusIndbank in 2019 and diverting the fund to other bank accounts and two similar cases against him filed by HDFC bank earlier.

In its complaint, ICICI bank said that KSBL, with dishonest and fraudulent intention of cheating, by planning criminal conspiracy, in collusion/connivance with other unknown unscrupulous person(s), if any, had misappropriated the financial assistance for their personal benefit thereby caused 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 563 crores.

Brief facts of the case are that KSBL promoted by Parthasarathy, M.Yugandhara Rao and M. S. Ramakrishna.

KSBL was a member of National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange of India (MCX) and Metropolitan Stock Exchange of India (MSEI) and a depository participant registered with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

Securities and Exchange Board of India (SEBI) in its circular directed that Clients’ securities lying with trading members/clearing members cannot be pledged to banks/NBFCs for raising funds SEBI also specified that broker should maintain clear segregation of client beneficiary account and its own beneficiary account.

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 SEBI guidelines.

Further, all pledges on securities were closed without approval from pledges and securities were transferred to end clients of KSBL thereby severely impacting security of all lenders including ICICI Bank.

Based on the facts, a case was registered against KSBL and is being investigated into.

The case was transferred to EOW, Cyberabad and a special team was formed for investigation of the case in EOW, Cyberabad.