May 2001
Mumbai broker held
India's stock markets are reeling from the effects of the
crisis in March. The arrest of Ketan Parekh, an influential Mumbai
broker, and top officials of a co-operative bank, on charges of
defrauding a state bank, confirmed fears that money from banks was
used to finance excesses on the stock market.
Bank of India was defrauded of Rs1.37 billion ($29.2 million) and
total bank losses are estimated at about Rs10 billion. The police
are unravelling Parekh's wide network. Several companies, it seems,
used bank borrowings to lend to Parekh, who then ramped share
prices.
Global Trust Bank, a private bank, called off its merger with UTI
Bank after the regulator said GTB's share price had been rigged.
Parekh, a client of GTB, bought shares of the bank. GTB chief
Ramesh Gelli has since quit. On April 19, the Securities Exchange
Board of India (Sebi), the market regulator,...
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