KSBL chairman arrested for defaulting bank loan

The Hyderabad police on Thursday arrested Karvy Stock Broking Limited Chairman C. Parthasarthy for allegedly defaulting the loan taken from IndusInd Bank.

The Central Crime Station (CCS) police made the arrest after registering a case against Karvy Stock Broking Limited (KSBL) on the basis of a complaint filed by the bank.

Parthasarthy will be produced before a city court later in the day, a police official said.

The IndusInd bank had granted a loan of Rs 185 crore to KSBL in 2019 on depositing the securities and guarantees to the bank but the company failed to repay. It was alleged that the KSBL illegally transferred Rs 138 crore to other companies.

Two other banks had also lodged the complaint against KSBL but for now the police have taken action only in connection with the case registered on IndusInd Bank’s complaint.

HDFC Bank, in its complaint, alleged that KSBL defaulted the loan taken in 2019. The stock broking company had taken a loan of Rs 350 crore against shares but only repaid Rs 142 crore. The bank said the remaining balance loan amount of Rs 208 with Rs 38 crore interest remain unpaid.

In November 2019, The Securities and Exchange Board of India (Sebi) banned KSBL over client defaults worth Rs 2,000 crore. The company was banned from taking on new clients and executing trades for existing customers.

This followed an investigation by the National Stock Exchange (NSE) which found that Karvy had allegedly sold client stocks pledged with it through associated entities. The regulator had told depositories not to act upon any instructions by Karvy Stock Broking on the basis of powers of attorney given to the brokerage house in order to prevent further misuse of client securities.