Deputy chief minister Sushil Kumar Modi in Calcutta on Saturday. Picture by Kishor Roy Chowdhury

Calcutta, April 27: Bihar government has urged capital market regulator Securities and Exchange Board of India (Sebi) to take action against Calcutta-based Rose Valley raising money via questionable means in the state.

Bihar deputy chief minister Sushil Kumar Modi met Sebi chairman U.K. Sinha in Mumbai on April 22 and sought the latter’s co-operation in “tightening the noose” around companies like Rose Valley.

“I have met Sinha in Mumbai and discussed with him about how such companies are operating in Bihar. He has assured me that Sebi would take necessary action,” Modi said on the sidelines of an interactive session of a chamber of commerce here today.

Sinha had assured Modi that he would send a team of the Sebi’s senior officials to Bihar soon to assist the state government in finding out the illegal and fraudulent practices of such companies and help formulate action against them.

The swift action by the Bihar government taking steps against the deposit mobilising firm stands in sharp contrast to the Mamata Banerjee government in Bengal which is yet to rise to the occasion.

Incidentally, Bihar has a law for the protection of depositors’ interest, an act that the Mamata government was trying to introduce in Bengal after sleeping over it for more than two years.

But Modi said these companies were taking advantage of the loopholes in the law, indicating the state act was not good enough to deal with such financial fraud. “The central government along with RBI, Sebi, SFIO should act together. There is also the need to form a unified regulator to act against such firms,” he said.

Explaining the modus operandi of Rose Valley, Modi said the firm was collecting money in the name of hotel booking. Their agents were going to the villages in Bihar with brochures of its hotels located in remote places in Bengal and collecting advance bookings, he added.

Investors have the option of not making the trip and take a higher return on their booking amount. Incidentally, the infamous Saradha group had been using this package as well.

“Rose Valley is a sponsor of the Kolkata Knight Riders. Their game plan is by sponsoring in these type of events they try to create a credibility in the market,” he said.

Modi, who is also the chairperson of the empowered committee of state finance ministers on implementation of goods and service tax, noted the firm was using tactics to create credibility among investors

Modi has also asked the state finance department to find out about activities of the Saradha group in Bihar and initiate appropriate legal action if the group is found indulging in fraudulent practices.

He also instructed the finance department to specifically probe the activities of the Koshi Central Cooperative Credit Society Ltd, Bank Employees’ Voluntary Cooperative Ltd, Prayag Group, Saradha Group, Vishwamitra and Rose Valley Corporation and ensure that the people of the state were not duped.

Modi also demanded the Union ministry of company affairs to intervene in ensuring the end of the illegal financial practices by such companies. He said having secured registration in Bengal, such companies were involved in duping the people by promising huge interest rates in several parts of India. He also requested the common people to stay alert against such companies.

Asked about the alleged involvement of members of Trinamool Congress in the Saradha scam, Modi said: “If any party leader is involved, then action should be taken.”

On the probe by SFIO against 73 Bengal firms, Modi said: “No timeframe has been given to SFIO by Sachin Pilot (Union corporate affairs minister). I suggest that within three months a preliminary report should be prepared.” He added: “I would urge the central government that until SFIO comes up with the probe, such companies should not be allowed to collect funds (from common people).”

He expressed concern about the staff strength of SFIO. According to the veteran politician, the regulator has as much as 90 per cent vacancy and would therefore be hard-pressed to undertake a probe of such magnitude on its own. He urged an “immediate” involvement of prime minister and union finance minister to resolve such financial irregularities.