ICICI Bank has filed a lawsuit against C. Parthasarathy, the proprietor of Karvy Stock Broking Ltd, and others for allegedly defrauding the bank of Rs 563 crore. The police issued a press statement on Tuesday evening, and the case was filed against the accused under IPC Sections 406 (criminal breach of trust), 420, r/w 34 (cheating). The money was raised by pledging the shares of Karvy Stock Broking’s six bankers. After then, the money was allegedly moved to the firm’s bank account rather than the Stock Broker Client Account.
According to the statement, this action violated India’s Securities and Exchange Board (SEBI) standards. Furthermore, all securities pledges were closed without permission, and stocks were transferred to Karvy Stock Broking’s end clients. According to the press statement, this had a significant impact on the security of all lenders concerned, including ICICI Bank.
The case was moved to Cyberabad’s Economic Offenses Wing, where a special squad was created to examine the event. According to a statement released by Avinash Mohanty, the Joint Commissioner of Police, the Chairman of the stockbroking business defaulted on the loan and transferred money to other bank accounts.
Read also: ICICI heist: Bankrupt murder accused banker sent to judicial custody
The accused corporation had become a defaulter by allegedly transferring this money to itself and other linked corporate organisations. According to a press statement from the police, the banks in question were left with no collateral, and as a result, Karvy Stock Broking failed on repayments of Rs 137 crore as of March 2021.
According to a subsequent inquiry into the matter, the accused had earlier transferred about Rs 720 crore of its clients’ cash to the firm’s trading account. The business was also accused of obtaining loan facilities worth Rs 680 crore from numerous other NBFCs by pledging its clients’ holdings without their approval. According to the press statement, this caused the repayments to default. According to the media, there were also two additional charges filed against the brokerage business and Karvy Commodities for allegedly conducting loan fraud against HDFC Bank. According to the press statement, the alleged theft was Rs 340 crore and another Rs 7 crore.
Read also: Axis Bank sacks Manager who looted ICICI Bank, killed woman officer
Karvy Stock Broking was prohibited from taking on any new brokerage clients by the SEBI in November 2019 after it was discovered that it had allegedly abused the clients’ securities worth Rs 2,000 crore. For being an accused defaulter, the brokerage company was also delisted from the Bombay Stock Exchange. Its membership in the National Stock Exchange was also terminated.
