Bengal bars MLMs from selling properties

Soon after Saradha crisis, WB govt passed West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2013

The repayment crisis triggered by the Saradha scam is spilling on to other multi-level marketing companies (MLMs), especially the smaller ones.

The latest blow, however, has come from the West Bengal government, which has prohibited tainted companies from selling properties to generate funds.

Soon after the Saradha crisis, the state government got passed the West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2013. The new Bill is a replacement of the Financial Establishments Bill, 2009, with added provisions relating to search, seizure and attachment of properties of such companies.

While the Bill is yet to get Presidential assent, the government has barred about 70 companies from selling their assets, said sources.

Moreover, with multiple agencies like the Serious Fraud Investigation Office, Securities and Exchange Board of India (Sebi) and income-tax department still inspecting the books of the companies, they have been barred from selling properties to meet redemption needs. With the provision to sell properties to generate funds now closed, many companies have sought more time for payment, said agents of MLM companies.

“Even if they want, these companies cannot sell their properties. There is direction on this against some companies. In some cases, state government authorities have sealed their offices barring them to make any kind of transactions,” said Partha Chatterjee, industry minister.

ICore E-Services Ltd, which had been raising funds through debentures, had not been able to meet repayment obligations for the last two months, said an agent.

The company has been barred from selling properties by the government