CALCUTTA, July 8: Prudential Capital Markets Ltd will dispose off assets if needed in order to repay depositors its chairman Vinod Baid said. Prudential has been confronted with an unexpected run on its deposits in the past one week.

On an all-India basis, Prudential Capital has made repayments to the tune of 25 per cent of its total deposits so far. The total deposit base of the Calcutta-based non-banking finance company (NBFC) is around Rs 75/80 crore.

Baid told The Financial Express that after the restructuring of the group now under way, it would no longer be classified as a NBFC. He explained that the financial climate was such that they had been forced to take the step to opt out of being an NBFC.While Prudential is sufficiently solvent to make good on its liabilities, if it comes to the crunch Baid might divest Prudential's stake in certain plantation companies in the Nilgiris, which Baid said were "non-performing assets not contributing significantly to the business of the group". Baid made it clear that selling of assets would only be resorted to as a last ditch effort. "We have not thought anything about it now," he said. While the company has not been able to stem the flood of withdrawals from maturing deposits, the company has taken action by stopping premature withdrawals and early redemptions.

This was done primarily in order to stop the run and as an official explained, "we have invested their funds in various instruments for a year. They cannot expect us to get hold of the money as and when they want it".The Reserve Bank of India has also been informed about the decision of the company in this respect.

Sources in the company said that most of the withdrawals have taken place in western Indian centres such as Bombay and Ahmedabad where at one point the repayment was as high as 60 per cent of the deposits.In Calcutta, Prudential's office had investors coming from as far away as Patna and even Visakhapatnam to retrieve their money. Company officials said that while they were doing their best to explain to the depositors to roll over their funds not many are taking their advice. Prudential, in common with other NBFCs, is saddled with bad debts to companies which have no intention of paying back. While officials were not willing to classify it as non-performing assets, "because we will get it back somehow", the core of the bad debts amount to a hefty Rs 40 crore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.