Chairman of Karvy Stock Broking arrested for defaulting on bank loan

One of the promoters of scam-hit Karvy Group, was arrested here on Thursday on charges of defaulting a bank loan, police said.

C Parthasarathy was arrested for defaulting on a loan taken from the IndusIndbank in 2019 and diverting the fund to other bank accounts, Avinash Mohanty, Joint Commissioner of Police, (Detective Department) said adding there are two similar cases against him filed by HDFC bank.

According to him, the HDFC bank also filed a similar complaint against the Karvy group.

The banks in their complaint alleged that Karvy group represented by Parthasarathy unlawfully pledged the shares of its clients and availed loans. The loan amounts have been diverted to other firms and subsequently defaulted on repayment, the official added. HDFC bank in its complaint alleged that Karvy, in total defaulted nearly Rs 350 crore while it was about Rs 237 crore in the case of IndusInd Bank. In November 2020, Bombay Stock Exchange declared Karvy Stock Broking as a defaulter and removed the brokeragehouse from its membership after a similar action was initiated by the National Stock Exchange.

In November 2019, the regulator barred Karvy from taking new brokerage clients after it was found that the brokerage firm had allegedly misused clients' securities to the tune of over Rs 2,000 crore.