MUMBAI, May 16: The Reserve Bank of India (RBI) has issued an ultimatum to the beleaguered CRB Capital Markets on Thursday to submit a status report to the RBI with a detailed plan for repayment of deposits within three days. The central bank has warned the company that `drastic' action will be taken if it fails to submit the report.

The central bank has directed Bhansali to submit a detalied plan for monthly cash flow, sale of assets of the company and repayment of fixed deposits to the tune of Rs 180 crore. The Reserve Bank has been empowered to file a 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.

The Company Law Board (CLB) is also likely to swing into action to sort out the CRB Caps imbroglio. Under the amended RBI Act, every 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 a deposit, the CLB either on its own or on being approached by the depositors, may force the company to repay the sum.

The CRB group chairman C R Bhansali has remained inaccessible for the past fortnight and all the offices of the company remained closed for the third day today.

The central bank is examining the exposure of various banks with the CRB group. As a result of the CRB fiasco, the RBI is likely to tighten the norms governing collection of deposits. Currently, finance companies have the freedom to mobilise deposits as per their choice. It may be recalled that the RBI last month barred CRB from raising deposits for non-maintenance of reserve requirements.

A host of developments ranging from high-cost borrowings, cancellation of the banking licence and ban on deposit mobilisation have led to a crisis in CRB Capital Markets, once considered as a leading finance company. The run on CRB's deposits has already created panic in the financial services sector. The central bank is likely to come out with restrictions on various incentives.

The company made two private placements soon after getting the banking licence last year. Investors who put in these private placements are unlikely to get back the money even though debentures are secured loans. It is understood that CRB has not mortgaged the assets which is a statutory requirement for debentures.

In another significant development, CRB Share Custodian Services has discontinued its services as the registrars and share transfer agents for CRB Capital Markets and CRB Corporation.

SEBI, on the other hand, is considering steps to prevent any adverse fallout on CRB Mutual Fund. Arihant Mangal Scheme, a close-ended fund, floated by the CRB Mutual Fund in 1994 had collected around Rs 230 crore from investors.

It is not clear what will happen to the mutual fund when its promoters are facing serious financial problems. ``Steps will be taken to ensure that investors in the mutual fund are not affected,'' SEBI sources said.

However, rating agencies came under heavy attack from several investors.

``Till recently rating agencies had given top rating to CRB Capital Markets.

They started downgrading only after the RBI cancelled its banking licence and banned the company from taking fresh deposits. The company was actually facing problems in the last one year. Rating agencies are supposed to monitor the companies on an ongoing basis and change the rating when things go wrong. In the case of CRB there was no such move from the rating agencies. This will affect their credit rating,'' said an angry investor.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.