Chain Roop Bhansali Case Study

Roop Bhansali Scam:

The accused in this scam was Chain Roop Bhansali. He was from a middle class family in Kolkata. Upon completing Chartered Accountancy in 1980 he started CRB consultancy in Kolkata. Due to his great personal contacts in a very short span, he managed to get many big clients in the city and grew popular. Soon he changed the name of the company to CRB Capital Markets from CRB Consultancy and made it a Public Limited Company. Their expertise lied in many fields such as, merchant banking, leasing and hire purchase, bill discounting and corporate funds management, fixed deposit and resources mobilization, mutual funds and asset management, international finance and forex operations. He raised ₹ 84 crores with three public issues

Bhansali was very easily transferring all the money he was raising from the market to imaginary companies that he had created. He made humongous amount of money through his various financial organizations like CRB Capital Markets which had raised him ₹ 176 crores, CRB Mutual Funds had contributed ₹ 230 crores and fixed deposits got him around ₹ 180 crores. Bhansali was paying the interest on investments by borrowing from the market. In the same year when the stock market collapsed it hit him and all his financial institutions very badly and he fraudulently obtained a whooping ₹ 1200

Some people also call him the Pied Piper of Dalal Street. He was a disciple of Harshad Mehta but unlike him Ketan Parekh kept a very low profile until one night when in 2000 his New Year celebration party was attended by many influential personalities from Political and Film fraternity. Just like his mentor he was a chartered accountant too. After 1999 Indian stock market was climbing up the ladder and this had given him an opportunity to put his evil ideas to work.

He picked a few companies such as, Amitabh Bachchan Corporation Limited (ABCL), Mukta Arts, Tips and Pritish NandyCommunications. He also had stakes in HFCL, Global Telesystems (Global), Zee telefilms, Crest Communications, and PentaMedia Graphics and held stocks in these companies. According to him, he chose these companies through the help of his research team which tagged these companies as high growth companies with a small capital base. Some people say the reason why he chose such companies is because of low liquidity cost. Later these companies were known as famous “K-10” stocks. Ketan Parekh used to do business through his company Triumph International. According to reports by mid-1999, he had 16% of Global’s floating stock along with 15% each in Zee and HFCL. He didn’t have enough money on him to buy large stocks, so he often offered shares as collateral and raised money from banks for