Mumbai, June 7: Reserve Bank of India (RBI) has barred Global Finance Corporation (GFC) from accepting deposits in any form with immediate effect. The Calcutta-based non-banking finance company is closely connected to the infamous CRB group. The central bank recently moved the Delhi high court seeking liquidation of CRB Caps.

The central bank has also directed Global Finance "not to sell, transfer, create charge or mortgage or deal in any manner with its property and assets without prior written permission of the bank for a period of six months".

The order is likely to deal a blow to Global Finance's plan to float a mutual fund, for which it has SEBI's approval. Global Finance had, in fact, incorporated an asset management company and a trust company for its proposed mutual fund.

Listed on the Mumbai and Calcutta exchanges, the company's scrip is now trading at Rs 4.

The Reserve Bank has clamped the prohibition order "in exercise of the powers vested in it under subsection (4) of Section 45K, read with Section 45MB of the Reserve Bank of India Act, 1934," a central bank release said.

According to central bank sources, three other NBFCs, JVG Finance, Helios Finance & Investment and Helios Investment Corporation, are likely to be prohibited from taking public deposits in the next few weeks. Though it is almost a month since the Patna office of Reserve Bank advised the central bank head office to prohibit the two Helios companies from raising deposits, no action has been taken so far. Helios Finance & Investment had a deposit base of Rs 40 crore at the end of March.

JVG Finance was issued a showcause notice by RBI in April on certain financial parameters. JVG already faces a number of legal cases.

Promoted by a diamond exporter RK Jain and BK Bhansali, a cousin of CRB group chairman CR Bhansali, Global Finance was, until recently, raising deposits from the public.

Contrary to reports that it was planning to close its Chennai office and withdrawing its fixed deposit programme, GFC's Delhi office continued to mobilise public money through fixed deposits.

Global Finance has an aggregate deposit base of over Rs 6 crore. With the central bank prohibiting it from taking fresh deposits, the company is likely to face a serious asset-liability mismatch and may face the same fate as that of CRB Caps, market sources said.

The links between CRB Group and Global Finance are strengthened by the crossholdings between the two companies. CRB Corporation holds Rs 68 lakh worth of shares in GFC, which is approximately 4 per cent of the latter's paid-up capital, while Global Finance holds Rs 15 lakh worth of shares in CRB Share Broking.

Barred from accepting deposits

Dhander Finance India Ltd.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.