Karvy Stock Broking Pvt Ltd (KSBL) chairman and managing director C Parthasarathy was arrested by Hyderabad police on Thursday for allegedly defaulting on bank loans. IndusInd Bank had lodged a police complaint against him for defaulting on Rs 237 crore of loan taken from the bank.
The Detective Department of Central Crime Station had registered the FIR and took him into custody. Joint Commissioner of Police (Detective Department) Avinash Mohanty said Parthasarathy was arrested for defaulting on a loan taken from IndusInd Bank in 2019 and diverting the funds to other bank accounts.
Officials said he had also defaulted on a loan from HDFC Bank and an investigation is going on.
The banks alleged in their complaint in June that Parthasarathy pledged shares of his clients and availed the loans, and diverted the money to other firms and started defaulting on repayment.
HDFC Bank had extended a loan of Rs 350 crore, said officials.
In 2019, the Securities and Exchange Board of India (Sebi) banned KSBL from taking fresh business for allegedly misappropriating money and securities, worth nearly Rs 2,000 crore, belonging to its investors, to fund its real estate arm Karvy Realty. Lenders, including HDFC Bank, ICICI Bank, IndusInd Bank and Bajaj Finance Ltd, had allowed Karvy to borrow money by pledging clients’ shares, putting the investment of over 90,000 investors at risk.
KSBL credited the funds raised by pledging of client securities to six of its own bank accounts instead of its client accounts and further has not reported these six own bank accounts to the Exchange, which is mandated under Sebi provisions, Sebi had said.