MUMBAI, March 1: The Reserve Bank of India (RBI) has directed Peerless General Finance & Investment Ltd, the country's largest residuary non-banking company (RNBC), to submit a turnaround strategy by the end of the month.The central bank is also believed to be pushing for the appointment of former State Bank of India chairman and current chief of Securities Trading Corporation of India (STCI) Dipankar Basu as one of the directors on the Peerless board. Basu will be the second State Bank chairman to grace the Peerless board after DN Ghosh.
Sources in the central bank said that Peerless chairman DN Ghosh and CEO SN Roy had met Reserve Bank deputy governor SP Talwar in the third week of February. Talwar reportedly issued an ultimatum to the company, directing it to finalise the turnaround report by the end of the month. "We have directed them to formulate a restucturing plan as we do not want the company to close down under any circumstances," a source close to the central bank said. "The company has ahuge depositors' base, and we cannot allow it it sink. Peerkess needs to restructure its business portfolio so that its net worth becomes positive," sources pointed out. Peerless has a deposit base of Rs 6,000 crore and a depositors' base of 30 crore. Reserve Bank officials have expressed concern over the steady erosion in the net worth of the Calcutta-based company.
Meanwhile, Peerless chairman DN Ghosh denied any move to put the company on the block. "There are no plans...We are not considering any such move. Nobody has approached us," he said. Recent newspaper reports had suggested a sellout to foreign finance companies to bail the company out from its current problems.
Among the plans that are likely to be considered by Peerless is a change in its business portfolio. The company might consider to move into lease and hire-purchase business, sources said. In that case, it will turn into a non-banking finance company (NBFC) and be subjected to the new Reserve Bank norms. Central bank sources said that aspart of the restructuring plan, D Basu is likely to be inducted into the Peerless board.
The current STCI chairman will have the complete backing of the central bank in steering the the company out of the current financial morass.
"He will have our blessings," a senior RBI official said. Peerless is a closely-held company with its CEO Roy controlling 76 per cent and Parasmal Lodha holding another 20 per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
