HYDERABAD: Karvy Stock Broking Private Limited’s COO Rajiv Ranjan Singh, who was arrested on Thursday along with CFO G Krishna Hari in connection with the IndusInd Bank fraud case, unauthorisedly executed trading, in trading accounts of nine other companies between 2014 and 2019.
In November 2019, the SEBI revoked the pledge of securities with banks and NBFCs, and returned the securities and accounts. As a result, IndusInd Bank was left with no collateral security. This resulted in Karvy Group defaulting repayments to the tune of Rs 137 crores as on March 31, 2021.
On August 19, the CCS arrested company’s CMD C Parthasarathy. During the investigation it was revealed that on the instructions of Parthasarathy, CFO Krishna Hari has diverted funds which were raised from the banks by pledging client securities as collateral to nine shell companies. This was done to show huge turnover and market share of KSBL in the stock market. This resulted in a huge loss of Rs 300 crore and the same was shown as book debts in their records.
Several criminal cases were also registered at CCS Hyderabad against the accused company and others. Cyberabad police also registered a case against KSBL and its promoters on charges of cheating ICICI Bank to the tune of Rs 563 crore on similar charges. Rajiv Ranjan Singh and G Krishna Hari were produced before the court and sent to judicial remand.
Client securities pledged as collateral
The probe revealed that the firm’s CFO Krishna Hari had diverted funds which were raised from the banks by pledging client securities as collateral to nine shell companies