RBI begins to verify credentials of about 34,000 cos: Pilot

Amid rising instances of investors getting duped by fraudulent investment schemes, the Corporate Affairs Ministry has said that the RBI has started verifying the credentials of about 34,000 companies whose particulars were shared by it with the central bank.

The Ministry had shared a list of about 34,000 companies, whose objective is to carry out financial businesses, but don't appear to have been registered as NBFCs (Non Banking Finance Companies) with the RBI.

The central bank regulates NBFCs while all companies have to be registered with the Corporate Affairs Ministry.

"Ministry of Corporate Affairs has shared the particulars of around 34,000 companies with the objectives of carrying on financial business with Reserve Bank of India (RBI).

"RBI has taken up verification of such companies," Corporate Affairs Minister Sachin Pilot said in a written reply to Rajya Sabha.

According to the Minister, companies are resorting to multi-level marketing schemes in violation of either "the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 or by floating unauthorised 'Collective Investment Schemes' in contravention of Section 11AA of the Securities and Exchange Board of India (Sebi) Act, 1992".

None of these companies also appear to be registered as NBFCs, he said.

In a separate reply, Pilot said that there are as many as 2.42 lakh "defunct companies", with Maharashtra emerging as the state with highest number of such firms.

As on December 12, 2013, there are 2,42,376 firms estimated to be defunct companies.

As per the state-wise break-up, Maharashtra has a total of 45,623 defunct companies, followed by Delhi (38,457) West Bengal (37,155), Tamil Nadu (24,195) and Karnataka (13,707).

Besides, the data showed that as many as 11,623 defunct firms have availed the 'Fast Track Exit Mode' to strike off their names from the register of companies, since 2011.

The 'Fast Track Exit Mode' was launched in July 2011, to provide an opportunity for defunct companies for getting their names struck off from the register of companies, to facilitate the exit of such firms without getting into the process of winding up.