Karvy chief Parthasarathi held for `780-cr loan fraud
Chairman of Karvy Stock Broking Private Ltd, C. Parthasarathi, was arrested by the Central Crime Station (CCS) police from his residence here on Thursday morning following a complaint from a bank that the company has defaulted on a `780-crore loan.
Parthasarathi, 67, has been named as an accused in two more cases filed by the CCS Hyderabad. He was sent to the Chanchalguda jail on a 14day
judicial remand, September 2.
A team from the Detective Department of the CCS knocked on Parthasarathi’s door at
7.30 am. He was brought to the CCS and placed under arrest. “His advocates
till filed for bail but we will conduct an investigation into the other two cases and produce him in court,” a CCS official said.
The arrest, the police said, followed a complaint from the vice-president of IndusInd Bank, Hyderabad, against Karvy Broking, alleging that it had borrowed `137 crore from the bank by pledging securities/ shares and personal guarantee of Parthasarathi.
“The company did so allegedly by suppressing the fact that the pledged securities belonged to clients and this was done without their consent and by misusing the power of attorney,” said Avinash Mohanty, CCS deputy commissioner of police.
“The securities were transferred into the demat account of Karvy Stock Broking Pvt Ltd and were pledged before the bank for margin and short-term requirement from March 1, 2013. The accused company became a defaulter by diverting the funds into its own and connected businesses entities.”
“On November 22, 2019, the SEBI had revoked the pledge of securities with banks/NBFCs and returned the securities/ accounts. The complainant’s banks were left with no collateral and thereby KSBL defaulted in repayments of about `137 crore as on 31.03.2021,” explained the DCP.
He said the accused has been booked under sections 406, 420, 409, 421, 422, and 120(B) R/w 34 of the IPC. Two other cases were registered against KSBL and Karvy Commodities Pvt Ltd pertaining to alleged loan fraud amounting to about `340 crore and `7 crore.
It had borrowed from ICICI Bank, Bajaj Finance and Kotak Bank, apart from IndusInd Bank and HDFC Bank over several years, with the company pledging the securities as collateral, police said.
Police said investigations into the case revealed that Parthasarathi had allegedly diverted `720 crore of clients’ funds lying in the bank accounts linked to their trading account.
“The company is learnt to have taken credit facilities from several other banks/NBFCs of about `680 crore by pledging client securities without their consent and defaulted on further repayment. In this regard SEBI banned Karvy in 2020.”
“Several criminal cases were registered at the CCS Hyderabad against the accused company and others. Parthasarathi was taken into custody at Jubilee Hills, Hyderabad and produced before the court for judicial remand. The case is under investigation,” the police said.