Policemen seal the Rose Valley office at Anisabad on Thursday. Picture by Jai Prakash

Patna police conducted raids on the Anisabad and Alamganj offices of Calcutta-based private fund mobilisation company Rose Valley in Patna on Thursday and seized Rs 5.3 lakh in cash, a number of passbooks and cashbooks.

Some employees, including regional manager Sidharth, were detained. Sources said over 23 lakh investors were associated with the firm owned by Gautam Kundu of Bengal.

The agents use d to collect money from investors, mostly from lower income group, promising high returns. The police also detained some investors to interrogate them.

Deputy chief minister Sushil Kumar Modi has said not a single non-banking financial company (NBFC) working in Bihar has mandatory RBI or Sebi licence to collect money from people. “Of 252 companies registered with the RBI for collection of money from small investors across the country, only two — Grihastha and Opal — have the licence to operate in Bihar. But even these two companies are non-functional now,” Modi said.

Those who attended Thursday’s meeting included RBI regional director P.K. Jena, Sebi eastern region chief general manager S. Krishna Mohan, state finance department principal secretary Rameshwar Singh, economic offences unit (EOU) inspector-general Pravin Vashishtha and others.

Neither do these NBFCs have a Sebi licence, nor are they registered with the registrar of companies, Modi said.

Asked what steps the government has taken to prevent such deceptions, Modi, who also holds finance portfolio, said: “We have directed the district magistrates to find out the authenticity of companies operating in the state. The DMs, before whom NBFCs are required to submit essential documents to carry out operations in the district, have been asked to send the documents to the finance department to be forwarded to RBI, Sebi and registrar of companies for verification.”

About safeguarding depositors from being duped, Modi referred to the Bihar Protection of Interest of Depositors Act, 2002, which says that any financial institution wishing to collect money from people will have to spell out area of operation licence from the RBI, Sebi, registration from registrar of companies and other essential documents to the district magistrate concerned in writing. The district magistrate would, then, send these documents to the state government for verification.

Referring to Rule 7(2) of the act, Modi said the rule empowers authorities to confiscate assets of such erring financial institutions and lodge FIRs in two specially constituted courts in Patna and Muzaffarpur. The government has requested Patna High Court to appoint judges in these two courts so that they can start functioning without any delay.

Asked why it took so many years to set up the two courts, Modi said complaints of fraud by financial institutions had never cropped up all these years. He expressed ignorance about the existence of financial companies operating in the state.