Mumbai, May 26: A five-member BJP delegation led by party general secretary and MP, Pramod Mahajan on Monday appealed to RBI Governor C Rangarajan to hold an inquiry into the private placement of fully-secured redeemable power bonds by CRB Corporation.

Mahajan said that CRB misused its bank licence for raising funds. It had gone for private placement of bonds though RBI had issued a showcause notice in December 1996 not to raise funds. However, till May RBI never made it public that it had withdrawn the in-principle approval given for CRB for a bank licence.

Mahajan told reporters that tax benefits under section 88 of the Income Tax ACT, 1961 and under section 54E A were given for the CRB power bonds. Besides, it had received approval from the Central Board for Direct Taxes. "The highlight of the bond included financial assistance from IDBI and Karnataka State Industries Development Corporation," he added.

Kirit Somaiya, Mumbai BJP president, wondered how tax benefits were given to CRB as such concessions were given to government and semi government agencies. "These benefits have been given so far to Travancore Electronics," he added.

Somaiya took strong objection to CRB Shares Custodian Services for acting as both trustee and registrar in the power bond. He demanded that it be made mandatory to differentiate between non banking finance and trustee companies.The delegation demanded opening of special branches of the official liquidator of CRB at Mumbai, Jaipur, Ahmedabad and Rajkot for creditors, small depositors and others affected to lodge their claims.

Mahajan said RBI was asked to work as a coordinating agency for taking action against those responsible and helping small investors to recover their money. "We will meet the finance minister in the first week of June requesting him to evolve a permanent mechanism for dealing with such situations," he added.

The delegation also called upon RBI to examine the build up of the wealth of the CRB Group of directors, executives and relatives and freeze their assets if they failed to give a convincing explanation.Mahajan said the insurance cover for the money deposited in the NBFCs should be given on the lines of banks. The RBI Governor had replied in the affirmative in this regard, he said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.