The total market liability of the company amounted to over Rs 400 crore.The Reserve Bank petition pointed out that the company's total amount of deposits outstanding as on March 31, 1997, was Rs 186.38 crore.

The central bank also annexed a list of credit exposures in various banks involving CRB group as on May 16, 1997, which shows that State Bank's credit to the company was highest at Rs 58.09 crore, followed by Bank of Tokyo (Rs 7.42 crore), Bank of Rajasthan (Rs 4.5 crore), Bank of Baroda (Rs 4.12 crore) and Bank of India (Rs 4.11 crore).

In the circumstances, "Reserve Bank is satisfied that the continuance of the CRB Capital Markets, a non-banking financial company, is detrimental to public interest and also detrimental to the interest of the depositors of the company," the petition said.

Jaitley pointed out that Gujarat finance minister Atmarambhai M Patel had written to RBI governor C Rangarajan saying "a large number of cooperative banks have placed deposits with the CRB group, a non-banking finance company with a network more than Rs 430 crore and sound finances. The total outstanding dues against said company is above Rs 600 crore."

Patel had requested the central bank to pass orders for the repayment of large amount of dues to the cooperative banks, whose survival and existence was in jeopardy.

"How did the company having assets worth just Rs 133 crore could manage so much of loans?" justice Sharma exclaimed.

CRB Capital Markets was incorporated on May 16, 1985, under CRB Consultants (Pvt) Ltd, which became public on March 4, 1991.

The central bank, after receiving several complaints about non-payment of deposits and fresh efforts to mobilise further deposits by offering incentives, served prohibitory orders on CRB Capital Markets on April 9, 1997, restraining the company from accepting deposits and dealing with its assets.

However, Reserve Bank learnt that all the offices of the company remained closed on April 9 and its chairman Bhansali was not traceable.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.