MUMBAI, June 25: Regulatory agencies and the Finance Ministry seem to be groping in the dark on the issue of regulating the newly mushroomed plantation companies all over the country. In spite of CRB scam which defrauded thousands of small investors, plantation companies are going ahead with their deposit mobilisation exercise fixing their rules and regulations offering very high rate of interest. The Finance Ministry is yet to come out with a clear-cut policy on such companies.

Although the Reserve Bank of India (RBI) has sent a letter seeking clarification on the regulatory mechanism for such companies to the Department of Company Affairs (DCA) almost a year ago, nothing has been finalised so far.

This has led to fears that another scam involving tree plantation companies will break out soon. It may be recalled that several plantation companies collected huge deposits from the public in Kerala and Tamil Nadu promising very high returns.

Even after the plantation companies were exposed a few years ago, the regulatory authorities have been passing the buck to each other on the issue. The DCA has a direct role as all the plantation companies are registered with the Registrar of Companies.

Teak plantation companies, hotel time-share schemes and goat-rearing schemes are being floated by dubious promoters in different parts of the country.

``This has been going on for the last two years. Following the depression in the markets, they had a roaring business. The government also turned a blind eye towards them,'' sources said.

The proposed Companies Bill has widened the scope for the definition of `securities' to include units issued by such plantation companies. It is not yet clear who will regulate this sector - DCA, SEBI or RBI?

At a meeting with the parliamentary standing committee on finance, the RBI Governor had reportedly assured the members that the RBI is taking corrective measures. Similarly, SEBI is also looking at ways to regulate such companies. The three regulators - RBI, SEBI and DCA - have not been able to bring plantation companies under control as none of the existing rules govern the method of their fund mobilisation.

There was a move from the RBI to bring such companies under its net. However, the RBI could not bring them under its purview following widespread protest. The RBI is not in a position to regulate such companies as their funds are not considered as deposits.

SEBI is also unable to do anything as the schemes floated by plantation companies are not considered as `securities'. In fact, except for a couple of plantation and time-share companies majority of such companies are not listed on the stock exchanges.

DCA also could not do much as money raised by plantation companies is not treated as loan and such firms are not manufacturing companies. ``Something needs to be done urgently. They are openly offering very high returns which cannot be serviced in normal circumstances," said a banking source.These schemes floated in the name of environmental protection and forestery development come under the environmental and agricultural ministeries also, but they have also been neglecting the massive fraud committed in the name of environmental protection. In fact, these ministries do encourage some plantation companies as a vehicle of forestry development and environmental protection.The role of income tax department is also to be studied as the income from such plantation schemes are often declared as tax free under certain sections of income tax. Misusing these benefits, the plantation companies have also been helping the parallel economy to convert black money into white.g¬Ut›7¼Tt›ensus on issues ranging from land mines to the FMCT.Cuba and Syria, backed by Burma and Morocco, want negotiations banning landmines to run parallel to those on nuclear disarmament. Mexico, under heavy diplomatic pressure from the US, caved in last week by abandoning its resistance to landmine negotiations.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.