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, barred three brokers, including Credit Suisse First Boston, from conducting business after an investigation into their role in the stock market crash in March.