Court frees broker Parekh on bail
MUMBAI, India (CNN) -- Mumbai stock broker Ketan Parekh, accused of involvement in an alleged $30 million pay order scam, was released on bail Monday after 54 days in custody.
A court in Mumbai ordered the release of Parekh and another accused, J. B. Pandya, manager of the Madhavpura Mercantile Cooperative Bank.
The pair had been held in police and judicial custody since their arrest on March 30 by the federal police unit, the Central Bureau of Investigation.
The court directed Parekh and his co-accused to furnish personal bonds of half a million rupees each ($11,000) and a surety of the same amount.
Pair ordered not to leave the country
Judge A. R. Joshi also ordered them not to leave the country without permission.
"The court held that the interrogation of the accused is no longer required to proceed with the investigation, which will now largely depend on documentary probe. This was also conceded by the prosecution," Parekh's counsel, Shirish Gute, told journalists shortly after the order was announced.
Investigators had maintained they needed more time to probe Parekh's role in the scam and to determine whether there were others involved.
Another key accused, Madhavpura Mercantile Cooperative bank chairman Ramesh Parikh, was released on bail by the court earlier. The MMC Bank had issued the pay orders in favour of Ketan Parekh, one of the best known stockbrokers in India.
Complaint lodged by Bank of India
Parekh was arrested after a complaint was lodged by state-owned Bank of India. Parekh allegedly used bank funds to pay losses incurred after a crash in stock prices.
Parekh is accused of defrauding the Bank of India of about $30 million, allegedly in connivance with MMC Bank officers.
Analysts said India's domestic stock markets seem to have factored in the Parekh case.
Market indicators, including the bellweather BSE Sensex in Mumbai, have begun rising as foreign institutional investors resume their buying interest in India.
Most of Parekh's favored stocks, known as the K-10, had been among the worst hit by the stock downturn earlier this year. But they too appear in recovery mode now. Most lost over 80 per cent in value after the allegations against the broker surfaced.
Markets crashed in early March
India's domestic stock markets crashed in early March, after what initially was seen as a market friendly Budget unveiled by Finance Minister Yashwant Sinha.
Within a few days of the budget announcement, the Sensex index at the country's oldest stock exchange, the BSE in Mumbai, fell almost 700 points, or close to 15 per cent.
A probe launched by the market regulator SEBI led to suspicion of insider trading involving BSE president Anand Rathi and the exchange's broker-management.
Tapes of the BSE president's alleged involvement in the scam compelled him to step down, and SEBI suspended the entire broker-management at BSE. It also suspended their business.
India's Parliament has launched an independent probe into the stock market scam via a joint parliamentary committee (JPC) made up of parliamentarians from across party lines.
"We will investigate all the allegations and parties, including the role of foreign institutional investors and also mutual funds," a member of the JPC said.
Parekh is also a partner to Australian media tycoon Kerry Packer. Parekh, Packer and Indian industrialist Vinay Maloo of HFCL joined hands last year to form India's largest venture fund, KVP Fund. The fund has not invested in any Indian projects so far.
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