IndusInd and HDFC Bank have filed a case, read the full case
C Parthasarathy, Chairman and Managing Director of Karvy Stock Broking was arrested by Hyderabad Police. He is accused of fraud and misappropriation of clients’ funds. IndusInd Bank and HDFC Bank have accused this financial services company of defaulting by taking loans.
Hyderabad: C Parthasarathy, chairman and managing director of Karvy Stock Broking, was arrested by the Hyderabad Police on Thursday. Police said that they are accused of fraud and misappropriation of clients’ funds. IndusInd Bank, while filing a complaint against this financial services company, said that the company has defaulted by taking 137 crore loans from it. Hyderabad Police’s Joint Police Commissioner Avinash Mohanty said that HDFC Bank has also filed two cases on charges of fraud of about 350 crores.
According to the police, the Hyderabad-based company has been charged with gross violation of Securities and Exchange Board of India (SEBI) norms, cheating, criminal conspiracy and breach of trust.
- what is the matter
In 2019, SEBI started an investigation against the allegations of several irregularities against the company. At that time it was revealed that Karvy had collected loans from banks and transferred this fund as working capital to its own subsidiary companies. Avinash Mohanty told that apart from IndusInd Bank and HDFC Bank, the company had also taken loans from ICICI Bank, Bajaj Finance and Kotak Mahindra Bank.
The company had taken these loans over many years. The company had shown its securities i.e. securities as collateral. However, SEBI’s investigation revealed that the securities held by the company with the banks were not its own, but that of its clients, while the banks were aware that they were its securities.
After this disclosure, SEBI banned Karvy from trading in NSE and BSE i.e. stock market in 2022. Since the money taken under this loan was used as working capital, the company started defaulting.
Police said that Karvy Stock Broking has some two lakh clients, but at present no complaint has been lodged from their side.