The Telegraph
Sunday , November 25 , 2012
Since 1st March, 1999
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Rogue finance firm spurs alert

Ranchi, Nov. 24: The state government today warned people against dubious non-banking finance companies (NBFC) operating with the aim of misappropriating hard-earned money of innocent investors.

Distributing posters highlighting Reserve Bank of India (RBI) guidelines to investors against fraud by non-banking financial institutions, joint secretary in the finance department Khurshid Anwer said the awareness drive follows information about a company which has duped investors to the tune of Rs 1,000 crore in Assam.

A letter from J. Chakravarty, additional director general of police (bureau of investigation), Assam, to SEBI regional manager in Calcutta said Rose Valley Group of Companies — through its concerns Rose Valley Real Estates and Construction Ltd and Rose Valley Hotels and Entertainment Ltd —launched several schemes to woo prospective investors and managed to collect Rs 1,006.70 crore from the public.

The companies, which have been directed by SEBI not to collect any money from investors or to launch any scheme, together owe Rs 636.3 crore to customers. However, against this liability, the company has a bank balance of about Rs 100 crore and fixed deposits of Rs 147 crore.

“We received a letter from SEBI informing us about Rose Valley Real Estate and Construction Limited, a fake finance company which has siphoned off more than Rs 1,000 crore from poor people in Assam. It was also brought to our knowledge that the same company is operating in Jharkhand and cheating illiterate workers in industrial areas like Bokaro, Dhanbad, Jamshedpur, Deoghar and Ranchi. Today I directed all deputy commissioners and police superintendents to take strong action against such companies and distribute these posters for public awareness,” he said.

He added that he had informed about the sections under which a fake NBFC could be booked. “I have asked them to act under Section 7 of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and lodge an FIR under section 3/4/5/6 of the said act and under section 420 and 120B of IPC,” he said.

According to him, the same company was operating in Dhanbad as Dhanbad Plantation Private Limited and in Deoghar as Shree Shokhaji Agro Plantation Limited.

The firm was collecting money from people on the promise that the funds would be used to raise plantations, which would fetch them good returns.

The posters urge people to ensure the genuineness of an NBFC before investing in it. They also ask investors to be doubly alert if the company offers an interest higher than the rate prescribed by RBI, which at present is 12.5 per cent per annum on domestic deposit only.

The posters also warn against companies offering gift incentives to solicit deposits from the public.

The guidelines urge investors to verify companies accepting deposits for a period less than 12 months and more than 60 months. Investors have been advised to refer to the RBI website to see the list of the companies whose application for certificate of registration has been cancelled.