Indian broker denied bail again

Ketan Parekh is escorted to a session court on April 9

In this story: Prices soon spiralled down Parliament adjourned again over opposition protests RELATED STORIES

By Suhasini Haidar
CNN correspondent

NEW DELHI, India (CNN) -- A Mumbai broker accused of manipulating the Indian stock market was denied bail by a special court in Mumbai Wednesday.

Broker Ketan Parekh and two of his associates will now be held in judicial custody until April 25.

Parekh, known as one of the biggest brokers and stockmarket investors in India, was arrested on March 30 and has been in custody since.

Parekh, in association with the former chairman of India's Madhavpura Mercantile Co-operative Bank, is accused of defrauding the Bank of India of almost $30 million by buying stocks with loans he acquired through allegedly violating established banking norms.

When those stocks dipped, Parekh couldn't pay up.

A report by the Indian stock exchange regulatory body SEBI, due to be tabled in parliament this month, is also expected to blame other Mumbai-based stock brokers as well as Parekh for triggering last month's crash in share prices.

Reports in the Indian press say these brokers short-sold stocks in anticipation of a bleak annual budget presentation by the government.

Prices soon spiralled down

Even though the budget was welcomed by the Indian market, prices spiralled down after only a brief rise because of the short-selling.

The crash killed government hopes of kick-starting the the sagging economy with its announcements of economic reforms and privatization programs.

Indian prime minister Atal Behari Vajpayee said on Monday that his government was concerned about manipulation of the stock market and that it would take measures to ensure banking procedures are followed.

Parliament adjourned again over opposition protests

Adding to the government's problems is the continuous adjournment of the Indian parliament because of opposition protests. The opposition is demanding the government's resignation over the defence tapes scandal.

In tapes released in March by an investigative news portal, senior members of the government were seen accepting money allegedly in exchange for facilitating defence deals.

On Wednesday, parliament was adjourned again due to opposition party protests.

There is other pressure. According to statutory requirements, Indian Finance minister Yashwant Sinha needs to have his budget passed by the end of parliament's session on April 27.

Indian rupee slumps to record low
April 18, 2001

See related sites about Asia

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.