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IPO scam: RBI charged with covering up

May 10, 2006 16:32 IST

The Investors' Grievances Forum on Wednesday charged the Reserve Bank of India with continued cover-up operation in the IPO scam instead of nailing down the scamsters.

IGF president and BJP leader Kirit Somaiya also said in a statement in Mumbai that the RBI, Securities and Exchange Board of India and the finance ministry were apprised of the fictitious demat accounts in May 2004.

He demanded that internal correspondence and discussions held on this issue between the RBI, Sebi and the finance ministry, since May 2004 be discussed in public.

"It is a pity that the RBI and the finance ministry are concentrating on the violation of Know Your Client guidelines. They are referring to only two IPOs -- IDFC and Yes Bank. Actually, violation/manipulation has taken place in 53 IPOs. Sebi has agreed and accepted manipulation in 23 IPOs of 2005," Somaiya said.

IGF claimed that manipulation has taken place in Bharat Overseas Bank.

Somaiya further said that at BOB, the main broker to manipulate the demat account process was the Panchal group.

BoB was also acting on the instructions of Karvy Securities Ltd to credit refund amounts to the accounts of a few brokers instead of the named holders of the refund orders, IGF said.

However, Somaiya also said that RBI and BoB have now initiated action against the bank's chairman and other officials.

The forum also said it is understood that the RBI plans to refer the matter of involvement of the chairman to the CBI.

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