Five year ban on 57 'vanishing' cos.

By Our Special Correspondent

NEW DELHI, MAY 13. The Securities and Exchange Board of India (SEBI) has slapped a five-year ban from associating with the capital market in any manner on 57 companies and 214 promoters or directors whose companies had taken deposits from the public and subsequently defaulted on its commitments. The SEBI has forwarded a list of such companies as well as 72 others to all the stock exchanges directing them to suspend trading in these scrips, the Lok Sabha was yesterday told by the Minister of State for Finance, Mr. Balasaheb Bikhe Patil.

The Minister said as many as 129 companies which had raised about Rs. 500 crores have so far been identified as ``vanishing companies''. A provision has now been made under Section 11B of the SEBI Act to take action against persons associated with the securities market provided that the board is satisfied that the action was taken in the interest of the investors, Further, the SEBI Act is constantly under review to improve its efficiency and effectiveness with regard to investor protection, assured Mr. Patil.

The Minister clarified that the Government does not guarantee the repayment of deposits. The company seeking deposits must make this position clear by incorporating a suitable disclaimer in the deposit application, stated Mr. Patil.

In reply to another question, the Minister admitted that a Kirloskar group company, Kirloskar Investments and Finance Limited, had defaulted in repaying the interest and the original deposit to investors. However, the group sold its stake to Ahmedabad-based Hari Singh Champawat and his associates. The company had wanted to change its name but approval was denied at the company's annual general meeting.

The Minister also told Members that the Reserve Bank had granted certificates of registration to three out of five non banking finance companies (NBFC) belonging to the Sahara group. The application for grant of the registration certificate to the other two - Sahara India and Sahara Investment India - had been kept pending as they had not achieved some of the eligibility criteria.

Another well known NBFC, Peerless General Finance Co., too has not been granted registration and given time up to January 8, 2001, to obtain the prescribed net owned fund of Rs. 25 lakhs.

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Section  : Business
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