Rs 563 Cr bank fraud: Cyberabad police book KSBL promoter C. Parthasarathy, others

Based on the complaint of Manager ICICI bank, a case under section 406, 420, 34 of IPC has been by Gachibowli police against KSBL, C. Parthasarathy, Yugandhar, and others.

According to the complainant, Karvy Stock Broking Company Limited, situated at Karvy Millenium Tower, Financial District, Nanakramguda, is promoted by C. Parthasarathy, M. Yugandhara Rao, and MS Ramakrishna.

KSBL was a member of the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Multi Commodity Exchange of India (MCX), and Metropolitan Stock Exchange of India (MSEI) and a depository participant registered with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

Securities and Exchange Board of India (SEBI) in its circular directed that clients' securities lying with trading members clearing members cannot be pledged to banks NBFCs for raising funds. SEBI also specified that broker should maintain clear segregation of client beneficiary account and its own beneficiary account.

Funds raised by KSBL by pledging shares from its six bankers were transferred to KSBL's own bank accounts, and not into 'Stock Broker Client Account', which is in contravention with the SEBI guidelines.

Further, all pledges on securities were closed without approval from pledges and securities were transferred to end clients of KSBL thereby severely impacting the security of all lenders including ICICI Bank.

"'KSBL, with the dishonest and fraudulent intention of cheating, by planning criminal conspiracy, in collusion/connivance with other unknown unscrupulous person(s), if any, had misappropriated the financial assistance for their personal benefit thereby caused a criminal breach of trust, wrongful loss to ICICI Bank with corresponding wrongful gain to themselves thus committed the fraud. The fraud amount involved a total principal outstanding of Rs 563 crores," police said.

Based on these facts, a case was registered against KSBL. The case has been transferred to the Economic Offence Wing (EOW) of Cyberabad police A special team has been formed to investigate the case.