Hyderabad: Speculative investment, especially in real estate, proved to be nemesis for several companies led by Telugus, including Satyam Computer Services Ltd. These falls reaffirm the love of Telugus for land — the most scarce commodity — and anything related to it. Not miss that league, the Rs 2,000 crore fraud in Karvy Stock Broking, led by another Telugu, appears to be rooted in real estate as over half of the amount that NSE accused it of swindling from its clients accounts found its way to its realty arm — Karvy Realty Private Limited.
The NSE report and Sebi order have been silent on the application of these funds by Karvy Realty.
Karvy Personal Wealth attracts high networth individuals (HNIs) to invest in high risk categories like real estate project financing for interest payments/dividends.
Karvy Personal Wealth on the other hand gets higher commission. The investments marshalled by this particular arm have seen many defaults due to financial woes of the real estate companies after the 2016 demonetisation.
Several HNIs had reportedly suffered huge losses.
Almost of a half the money was diverted by Karvy Stock Broking from 2016 and 2019.
A few months ago, some people had lodged a compliant with Bengaluru police against Karvy Personal Wealth after the builder defaulted on its repayment commitments.
According to the complainants, the payment have become irregular after the demonetisation. Though the lending was backed collaterals in form of undivided land share, they claim that the building was not completed by the builder due to cash crunch, which rendered the collaterals useless.
