New Delhi: The Supreme Court has directed the Madhavpura Mercantile Co-operative Bank (MMCB) to approach the trial court to cancel contoversial stock broker Ketan Parekh's bail.
The SC issued the warrant after Parekh repeatedly defaulted in repaying the 888 crore rupees he owes the Madhavpura Mercantile Co-operative bank.
Parekh has so far paid up Rupees 396 crore, and is yet to pay the remaining Rupees 492 crore. The chairman of the bank at that time Ramesh Parikh was allegedly involved in the multi-crore scam involving Ketan Parekh.
Ahmedabad-based was reportedly violating banking norms to fund the arrested Bombay-based leading broker Parekh, who is said to have close ties with MMCB chairman Ramesh Parekh. The bank had received the status of scheduled bank from Reserve Bank of India only two years ago.
That had enabled the bank to expand its banking activities outside Gujarat.
Madhavpura Bank chairman Ramesh Parikh had sanctioned advances to the tune of Rs 2 billion to big bull Ketan Parekh.
The ensuing acute liquidity crisis forced the Madhavpura Bank to shut its branches in Ahmedabad and Bombay.
RBI instituted an inquiry which revealed that the bank's liquidity position was precarious after it issued pay-orders of Rs 650 million to the depositors.
But the bank was not in a position to honour those pay-orders.
The RBI then recommended a Central Registrar of Co-operative Banks to supercede the board of the bank.
The RBI appointed an Administratorand carried out investigations.
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