RBF scam -- Over Rs 163 cr dues irrecoverable
EEB & AGENCIES

CHENNAI, MAY 5: Nearly Rs 163 crore out of a total of Rs 490 crore outstanding loans of the closed nidhi company, Royapettah Benefit Fund (RBF), were irrecoverable, its newly constituted board chairman A R Rao said today.

The board, he said, had initiated action to dispose of the Nidhi's immovable properties and some properties offered by borrowers as collateral so that repayment to depositors could commence. Listing the `irregular' acts, Rao alleged that out of Rs 87 crore loan given to one of the borrowers without proper security, Rs 7.5 crore found its way to S Subramanian, former RBF chairman.

He also charged that loans were also given to the borrower for investing in two new ventures in which Subramanian had interests as chairman of the two companies. Referring to some of the borrowers, particularly fromthe film industry, Rao said a leading Tamil actor, who owed RBF Rs 3.79 crore, had issued cheques which bounced.

The new board was taking appropriate legal action against this, he said. A famous actor of yesteryear and six others of his family collectively owed Rs 1.61 crore but they had now assured that they would pay the entire amount, he said.

Rao told reporters that while Sivaji Ganesan's group owed to the fund Rs 1.6 crore, Saratkumar owed Rs 3.79 crore and Bhagyaraj Rs 66.19 lakh. Saratkumar was extremely uncooperative with the fund to pay back the dues, he said.

The nidhi had lent large sums to a few groups of persons without security and these persons failed to pay resulting in a liquidity crisis, he said. The mega borrowers included Balaji Group (Rs 231 crore), J M Pandey (Rs 87 crore), Pradeep Kothiri (Rs 40 crore) and Alsa Group (Rs 36 crore) other borrowers owed (Rs 96 crore).

Rao, who was flanked by other directors of the newly constituted board as also investigating officers of the state police department, said that the fund hoped to recover about Rs 250 crore from the defaulters in the coming two years.

About 48,000 depositors, who had deposited small sums below Rs 2,000 would be paid back in full, while five per cent of the deposits would be repaid by June 15, he said. The Balaji group, which had undertaken to repay Rs 50 crore by April 30, had paid only Rs 35 crore so far and the Supreme Court had stayed the collection of the remaining Rs 15 crore.

Rao said the fund had stopped giving loans and would concentrate on collecting the dues from borrowers. It would operate only from its head office at Roypettah. Its office properties elsewhere were being sold to pay back the depositors. There are about 185,000 depositors.

Answering a question, Rao said repayment of the entire deposit would depend on the recovery of loans some of which was given without proper security and in some cases even without a proper application form. In one case, a share in a property proposed to be constructed was given as security, Rao said.

Subramanian had sold the controlling interest of the fund to the Balaji group for a consideration of Rs 30 crore. This was irregular since no shareholder could exercise more than 45 per cent of voting rights.

J Ilavarasi, a close relative of Sasikala Natarajan, had an outstanding loan of Rs 92.19 lakh. Former minister and AIADMK leader S Muthusamy owes to the fund Rs 13.01 crore. In the case of loan given to J M Pande, some of the amount was rechanneled into Subramanian's pocket, Rao said.

The nidhi was paying even interest to depositors from fresh deposits. When fresh deposits flow stopped from April 1999 the nidhi found itself in a vulnerable position of not not being able to pay its depositors, Rao explained.

DCA, RBI to reveal 108 defualting NBFCs

NEW DELHI: The Department of Company Affairs (DCA) along with RBI will make public the list the names of 108 defaulting non-banking finance companies (NBFCs) and their directors. "After meeting with RBI officials yesterday the decision was taken to make the list of 108 defaulting NBFCs as part of the precautionary measures and increase public awareness about these companies," DCA Secretary P L Sanjeeva Reddy said at a conference on frauds organised by Association of Certified Fraud Examiners.

He said the move to make the names public was in view of the large number of NBFCs defaulting in repayment of fixed deposit is even after the order passed by the Company Law Board. Asked whether DCA ha taken up the issue of more powers to CLB in regard to repayment of fixed deposits of NBFCs, he said this issue was being discussed with RBI.

He said there has been large amount of siphoning of funds by a number of NBFCs and the various regulators - RBI, DCA, SEBI and CLB - are are seriously looking at it. DCA Secretay said all the regulatory and enforcement bodies should come together in order to detect and avoid fraud.

Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.