The Telugu Desam (TDP) has suspended MLC Vakati Narayana Reddy from the party following a cheating and loan default case registered against him and his firm by the CBI.
Reddy, a former Congress MLC, was elected to the AP Legislative Council for a second term in March as the TDP candidate from Nellore Local Authorities constituency.
"As the CBI has registered a case against him, I have decided to suspend him from the party till such time he comes out clean," TDP president and Chief Minister N Chandrababu Naidu told reporters here this evening.
"It is not good for the party and so he is suspended with immediate effect," he added.
CBI had conducted searches at the MLC's house in Nellore town and also at his office VNR Infrastructures in Hyderabad and Bengaluru.
The agency has registered a case against him and his firm for obtaining a loan of Rs 190 crore from IFCI using "fabricated" documents and later defaulting on repayment.
The loan, along with interest, has now touched Rs 205 crore, sources in the CBI said.
The MLC had obtained a loan of Rs 190 crore in 2014-15.
Reddy had taken oath for the second term on May 1.