Ketan Parekh Scam

Contents: Introduction Mechanism of scam Impact of scam SEBI Measures Conclusion .

Introduction .

Mechanism of SCAM .

these. such as the Kolkata and Ahmedabad stocks He borrowed heavily from banks such as Global trust Bank and Madhavpura Mercantile Cooperative Bank. When the price was high enough. a qualified CA. Bank. . and a stock broker. He used a large number of Benami accounts and smaller stock exchanges. he pledged the shares with banks as collateral for funds. and took up huge positions in these. identified a number of stocks (popularly called the K10). funds.Ketan Parekh. 10).

Rs.. 10 billion of which over Rs. billion were lend to KP and his firms KP reportedly used his BOI accounts to discount 248 pay orders worth about Rs. March 2001 BOI·s losses eventually amounted to well above Rs.2 Rs. It was alleged that MMCB issued funds to KP without proper collateral security and even crossed its capital market exposure limits As per a RBI inspection report. 8 Rs.Cont. billion The MMCB pay order issue hit several public sector banks very hard . 24 billion between January and Rs. 1. MMCB·s loans to stock markets were around Rs.

K 10 Stocks Aftek Infosys DSQ Software Global Telesystems Himachal Futuristic Communications Pentamedia Graphics Satyam Computers Silverline Technologies SSI Zee Telefilms Pritish Nandy Communications .

Impact of scam .

The effect of the Ketan Parekh scam on the stock markets: The Bombay Stock Exchange (BSE) President Anand Rathi's (Rathi) resignation added to the downfall. A change of Re. at least eight people were reported to have committed suicide. 1 in the price of a share when one speaks of a share rising or falling by so many points . Rathi had to resign. By the end of March 2001. Hundreds of investors were driven to the brink of bankruptcy.

. During this period it was the reverse.The effect of the Ketan««. . It affected the FDI·s and the FII·s. It was alleged that Global Trust Bank exceeded its Capital market exposure. People got panicked. Many took back there investments.

The Sensex lost over 700 points The immediate fallout of market crash in Bombay The payment crisis broke out in the Calcutta Stock Exchange (CSE) .

Advisory Board on Banking.SEBI Measures SEBI first realized after 1992 scam. Has been given considerably more powers since then. . Set up the Department of Supervision. Commercial and Financial Frauds (ABBCFF) came into picture.

SEBI banned 26 entities from trading into market.A high level committee comprising of RBI Governor. . SEBI Chairman. A Serious Frauds Office was set up under the Department of Company Affairs (DCA). Finance Secretary was created.

Conclusion .


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