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Goa cracks the whip on fraudulent NBFCs, ordinance issued

Sandesh Prabhudesai in Panaji

The Congress government has finally decided to issue an ordinance to protect the interest of depositors investing with the non-banking financial companies, on the lines of the legislation existing in Tamil Nadu. Over 20 such companies have duped thousands of Goans for over Rs 500 million in last three years.

The ordinance, which is a replica of the Tamil Nadu Act, provides for stiff penal provisions like a fine up to Rs 100,000 and imprisonment till 10 years to every responsible person of the financial establishment. It also provides for attachment of property and setting up of a special court to deal with such cases.

The draft ordinance, which was prepared in June, was awaiting a nod from the Centre. Meanwhile, the government had set up a special cell to deal with such cases as the inexperienced officers allegedly mess up the whole case, giving enough chance to the NBFCs to go scot-free.

The aggrieved investors, however, are still critical of the way the local Congress government is tackling a financial scam, allegedly involving Union Environment Minister Suresh Prabhu belonging to the Shiv Sena. He has allegedly duped around 200 investors for over Rs 120 million. The police investigations in this case are moving at a snail's pace.

Several NBFCs have mushroomed in Goa, targeting the Gulf-based NRIs who invest millions of rupees in such NBFCs, for want of attractive rates of interest.

The NBFCs follow a similar modus operandi by opening posh offices, appointing Goans as managers and commission agents and win over confidence for at least six months or a year, before allegedly disappearing from the scene.

"Goa does not need any NBFCs as the tourist state has a large number of banks offering good investment deals," feels Chief Minister Luizinho Faleiro. While announcing the cabinet decision regarding the ordinance, he said he would deal with such cases more firmly in future. The ordinance is expected to be issued within a week.

Rockland Leasing & Plantations Company reportedly heads the list of NBFC frauds with an amount of Rs 170 million invested by thousands of Goans. Second in the line is J V J Finance, which had set up several offices in Panaji since May 1996 and attracted deposits of Rs 60 million.

Others include Calcutta-based Janapriya with an amount of Rs 18 million, Tamil Nadu-based Sarvana Credit and Investments Limited with Rs 15.7 million as well as Middleman Goa, Woodstick & Woodstick, Welfare Savings and Credit Limited, Prudential Capital Markets, Deeplaxmi Green Plantations.

Complaints filed before the local Reserve Bank of India office as well as at several police stations indicate a figure of only around Rs 290 million. But police sources admit that the figure should be at least double and many more cases are expected to come to the light.

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Goa