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Hyd police arrest scam-hit Karvy’s CEO, CFO in ₹137 crore loan default case
The arrests were made after the vice-president of IndusInd Bank, Hyderabad, lodged a complaint with the police, alleging that Karvy availed credit facilities to the tune of ₹137 crores from the bank by pledging securities/shares and personal guarantee of its chairman and managing director Parthasarathi.
The Hyderabad police on Thursday arrested the chief executive officer (CEO) and chief financial officer (CFO) of scam-hit Karvy Stock Broking Pvt Ltd in connection with the ₹137 crores loan default case.
Rajiv Ranjan Singh (52), CEO, and G. Krishna Hari (63), CFO, were taken into custody by officials of the Central Crime Station (CCS) of the Hyderabad police. Before this, C Parthasarathy, the chairman of the company was arrested on August 19 on charges of defaulting ₹137 crore loan to IndusInd Bank.
The arrests were made after the vice-president of IndusInd Bank, Hyderabad, lodged a complaint with the police, alleging that Karvy availed credit facilities to the tune of ₹137 crores from the bank by pledging securities/shares and personal guarantee of its chairman and managing director Parthasarathi.
The bank alleged that Karvy officials suppressed facts that the securities belonging to clients were pledged without their consent. In 2019, the Securities Exchange Board of India (SEBI) also barred Karvy from taking new clients after it was found that the brokerage firm allegedly misused clients’ securities worth over ₹2,000 crores.
However, this is not the only case in which Karvy officials have been booked. On August 25, the Cyberabad police (separate commissionerate covering Hyderabad’s IT hub of Hitec City) also registered a case against Karvy Stock Broking Pvt Ltd for allegedly duping ICICI Bank of ₹563 crores.
On Thursday, the Hyderabad police, in a press release, said that the accused company became a “defaulter” by diverting funds into its own, and connected businesses entities. “The complaint bank was left with no collateral, and thereby KSBL defaulted in repayments of about ₹137 crores as on 31.03.2021,” it added.
According to Avinash Mohanty, joint commissioner of police (detective department), Rajiv Ranjan Singh, who is in charge of trading and broking, executed trading accounts of nine companies from 2014 to 2019, and Krishna Hari diverted funds, which was raised from banks by pledging client securities as collateral to nine shell companies on verbal instructions of Parthasarathi.
It was allegedly done to show a huge turnover and market share of Karvy in the stock market, and it also caused a huge loss of ₹300 crores, which was shown as book debts. “Further, several criminal cases were registered at CCS DD Hyderabad against the accused company and others,” said the police.
The aforementioned persons were arrested and produced before a local court for judicial remand. They have been booked under sections 406, 420, 409, 421, 422, 120(B) R/w (read with) 34 of the Indian Penal Code (IPC). M. Yugandhar Rao, the co-founder of Karvy group, who is also an accused in the case, is yet to be arrested.
