Everything About The Ketan Parekh Scam 2001

Who is Ketan Parekh?

Known as the ITC bull, Ketan Parekh began his career in the early 1980s. At that time he was helping his father, who was also his role model, and uncles at “Narbheram Harakchand Securities,” their family firm that his grandfather formed in the pre-independence period. He also cleared the Chartered Accountancy exam in 1985 and became a certified CA.

The Ketan Parekh Scam 2001

Ketan Parekh first bought huge holdings from promoters at substantial discounts before diverting his concentration to institutional investors. He had an optimistic perspective on the stock market. He needed three things to grow the market: stocks, the stock exchange, and money.

After the 1992 Scam, the Bombay Stock Exchange (BSE) upgraded security and fraud detection. Ketan Parekh traded on the Kolkata Stock Exchange, which had sloppy regulations. He chose his stocks based on four crucial criteria:

  • The company must be young
  • Must have promising prospects
  • Must have a small market capitalization
  • Conduct a low volume of business

After the dot-com boom appeared, his stock portfolio was mainly focused on the ICE sector. He used his own money or promoters like Global Telesystems, Zee Telefilms Communications Ltd., and Himachal Futuristic to fundraise.

Without delivering sufficient security, some money was obtained from institutional investors through banks. This also included Global Trust Bank, Madhavpura Mercantile Cooperative Bank (MMCB), and mutual funds.

He bought certain bank shares to coax the Madhavpura Mercantile Cooperative Bank’s loan decision in his favor. During that time, RBI  allowed dealers to receive a credit of about 15 crores.

MMCB issued pay orders totaling Rs. 137 crores in March 2001 for Ketan Parekh’s firms. Classical Share and Stockbrokers got 65 crores, Panther Investrade got 20 crores, and Panther Fincap got 52 crores.

These organizations had accounts with the Bank of India, which discounted the pay orders. But the Reserve Bank of India stepped in and gave the Bank of India the bouncing pay orders back in 2001.

Due to a lack of funds, MMCB could not process the payments. RBI declared MMCB as a defaulter, costing the bank 137 crores. Only Rs. 7 crores of Ketan Parekh’s obligation was repaid, initiating a 130 crore rupee scam case against him.

The Unknown Truth About The Scam

Ketan served his time in jail and for years he worked relentlessly to return the money he owed. Following the court orders and being a law-abiding citizens, only a few close ones know how he has repaid most of the borrowed funds and fulfilled his obligations as set by the Supreme Court. Some transactions are still being reviewed. Sadly, no one was curious in knowing this hence it remained a hidden truth for years.

After being convicted Ketan had many choices in front of him. It was easy to elope with the amount and settle somewhere in the world where life could have been easier. Unlike scammers like Vijay Mallya or Nirav Modi, he did not run away from the country even though he had adequate means to do so. Ketan could have lived a stress-free life ignoring the judgment of society.

However, the choices he made certainly put him in a challenging position. It is rather clear that Ketan Parekh has been known for his fraud for more than 2 decades, but anyone barely knows about what happened after the scam and what Ketan did post his conviction.

To Top