Bank loan

ED to question C Parthasarathy in police custody

Hyderabad: Comandur Parthasarathy, the Chairman and CEO of Karvy Stock Broking Limited (KSBL), who was arrested by the Enforcement Department (ED) on Sunday in connection with a bank fraud case, is expected to be questioned in police custody .

The agency secured five-day custody of the alleged accused. Prathasarathy is currently being held in Chanchalguda prison from where he will be taken into custody. He was incarcerated in Bengaluru prison and transferred to Chandhalguda prison under a prisoner transit warrant.

Initially, the Hyderabad Central Crime Station (CCS) police lodged a complaint against him. Hyderabad Police filed five complaints against the company. Indusind Bank and HDFC Bank had alleged that KSBL had committed credit fraud by pledging its client’s securities and misappropriating the loan proceeds.

The ED has launched a money laundering investigation based on Hyderabad Police FIRs.

Hyderabad CCS Police had filed an indictment in the case. The ED, after initiating a PMLA investigation, took a copy of the indictment and other relevant documents to investigate the money laundering case. The ED also took income tax, RBI, SEBI and NSE reports to make their case.

It was alleged that the management of KSBL committed bank frauds of several hundred crores of rupees.

KSBL reportedly transferred Rs 550 crore to multiple accounts.

Indusind Bank has provided a loan of Rs 137 crore to KSBL on the basis of securities, shares and personal guarantees. One of the guarantors was the chairman of KSBL, C Prathasarathy. They removed the fact that the pledged securities belonged to clients.

All securities were transferred to KSBL’s demat account and pledged to IndusInd bank for margin and short term needs in their business.

HDFC Bank also alleged that KSBL took out a Rs 329 crore loan by illegally pledging their clients’ securities. Later they transferred the case.

ED also learned during the investigation that between 2016 and 2019, KSBL allegedly transferred Rs 1,000 crore to the company Karvy Realty.

Last September, the ED conducted searches at various addresses belonging to the KSBL. The ED had also frozen the shares of the Karvy group.

The ED gathered a lot of incriminating material and probed the case.