RBI starts scrutiny of companies suspected of raising illegal money

As part of its efforts to protect gullible investors from fraudulent investment schemes, the Reserve Bank has started scrutinising credentials of companies suspected of illegally raising money from public as NBFCs.

The central bank's action follows the Corporate Affairs Ministry sending a list of more than 34,700 firms that came under its scanner for allegedly pooling money as non-bank finance companies (NBFCs).

The ministry had prepared the list early last year when Rs 10,000-crore Saradha chit fund scam — that duped thousands of investors of their hard earned money — came to light. Sources said the Reserve Bank of India has begun analysing details of entities, which are believed to have raised money from the public illegally without getting registered as NBFCs.

The cases are being pursued after reference from the Corporate Affairs Ministry to probe 34,754 companies (other than those registered with RBI). NBFCs are regulated by the RBI.

Sources said all the entities, which are under the scanner, would be provided an opportunity to clarify their position, before taking action. The excercise has revealed that 4,102 companies were registered with RBI as NBFCs.

In the second stage, sources said, the RBI focused on the remaining 30,652 companies and it revealed that 13,647 companies are not meeting the business criteria requiring certificate of registration for functioning as NBFC.

Further, complete information on 6,182 companies is not available on the ministry website and 4,125 companies are under liquidation. Of the remaining 6,698 companies, only 213 are accepting public deposits and 1,643 are meeting business criteria for NBFC certification, sources said, adding, 4,842 companies are ineligible for registration as NBFCs.

Sources also said that the RBI has reported that there are 543 NBFCs operating in different states and unions territories which are not registered with the central bank, against whom complaints regarding non-payment of investors' money have been received or noticed by the RBI during the three calender years till 30 June, 2014.