The Reserve Bank of India issued an ultimatum to CRB Capital Markets directing the CR Bhansali-managed NBFC to submit a detailed plan for settling Rs 180 crore worth of liability to the fixed deposit holders within the next 72 hours. The ultimatum was issued on Thursday.

The RBI has threatened to take ``drastic action'' if CRB Caps fails to submit the action plan. The implication is clear: the Reserve Bank will order liquidation of the company if Bhansali does not come out with a concrete plan to protect investors' interest by Monday.

The Reserve Bank has been empowered to file petition for winding up of an NBFC in certain circumstances as enunciated under the newly introduced provision of Section 45MC of the Reserve Bank of India (Amendment) Act 1997.

``This will be a test case for the non-banking industry as this is the first instance of RBI exercising its newly acquired powers under the amended Act,'' central bank sources said.

The Reserve Bank issued the ultimatum on May 16, the day thousands of depositors thronged the CRB Caps headquarters in Mumbai to withdraw fixed deposits. The central bank has directed Bhansali to submit a detalied plan for monthly cash flow, assets of the company and repayment of fixed deposits to the tune of Rs 180 crore. If the NBFC does not come forward with the plan within the stipulated timeframe, the Reserve Bank will be forced to take drastic action, the note sent by the department of supervision (DoS) of the central bank said. RBI deputy governor S P Talwar, who heads the department of supervision, is closely monitoring the developments. Along with the RBI, CLB is also likely to swing into action to sort out the CRB Caps imbroglio. Under the amended RBI Act, evey deposit accepted by an NBFC is required to be repaid, unless renewed, as per the terms and conditions of the deposit. Where an NBFC fails to repay any deposit, the CLB either on its own or on being approached by the depositors, may force the company to repay the sum.

On April 7, the Reserve Bank issued the prohibitory order banning fresh deposit mobilisation by CRB Caps which triggered a run on the company's deposits. The central bank also directed the NBFC not to sell its assets without its consent.

This is the first instance of Reserve Bank prohibiting the sale of assets of an NBFC after the amendment of the Act. Armed with the amendement the central bank is now empowered to direct an NBFC not to sell or transfer any of its assets for a period not exceeding six months from the date of the prohibitory order without prior permission from the Reserve Bank. ``The central bank will have to settle the CRB Caps imbroglio fast as the RBI ban on the sale of assets will be valid only for six months,'' industry sources said. The only way CRB Caps can escape the RBI action is by obtaining a stay order from a court, sources pointed out.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.