MUMBAI, December 10: The Reserve Bank of India (RBI) today banned McDowell Krest Finance Ltd, owned by Vijay Mallya of the UB group, from accepting deposits from the general public. Consequently, the Bangalore-based company has been disallowed from raising fresh deposits or renewing new deposits.

The RBI action follows a large number of complaints regarding default in repayment of matured deposits by McDowell Finance. An inspection of the company by the apex bank officials revealed that the financial position of the company is not satisfactory. According to the RBI, McDowell Finance did not submit the prescribed annual and half-yearly returns and has not followed prudential norms for income recognition, asset classification and provisioning of non-performing assets.

The company, a subsidiary of McDowell & Co, had not obtained credit rating from an approved credit rating agency for its deposit mobilisation programme. The company has also reimbursed its brokers conveyence charges, over and above the normal brokerage in violation of the RBI's directive in this regard, the RBI said.

This is the first time the RBI has banned a finance company from a major business group.

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