Sebi passed orders against two erring cos in Assam, says Govt

The two firms -- Rose Valley Real Estate & Construction and MPS Greenery Developers -- were found by Sebi to be carrying out activities of Collective Investment Schemes (CIS) without registration from the market regulator

The government today said market regulator Sebi has passed orders against two erring companies in Assam, which were collecting money from public without requisite approvals.

The two firms -- Rose Valley Real Estate & Construction and MPS Greenery Developers -- were found by Sebi to be carrying out activities of Collective Investment Schemes (CIS) without registration from the market regulator.

Sebi has directed MPS to wind up the schemes and refund the money to investors, while Rose Valley has been barred from collecting money from investors or introducing a new scheme, among other things, Finance Minister P Chidambaram informed the Rajya Sabha in a written reply.

The Finance Minister was responding to a query about the number of fraudulent firms engaged in hoodwinking and siphoning off money in name of lucrative investment schemes in Assam.

Chidambaram said Sebi is aware of a few companies collecting money from common people in the state, which are in the nature of Collective Investment Schemes (CIS).

Further, the Finance Minister said, that RBI has observed no violations of its guidelines by Non-banking Finance Companies (NBFCs) registered with it, in Assam.

"However, Guwahati regional office has received complaints that certain entities are accepting money through various schemes such as booking plots, booking holiday packages, issuing Non Convertible Debentures (NCDs) to the public alluring them with high returns," he said.

The RBI has received 27 such complaints pertaining to Assam between April, 2012 and March 7, this year.

The Minister said since these entities are not registered with RBI, the central bank has forwarded the complaints to "the appropriate authorities including the Economic Offenses Wing (EOW) of the state police for taking necessary action against the erring entities".

To a query about norms to regulate and resist practice of duping of money, Chidambaram said "to curb the financial frauds committed by the companies registered under the Companies Act...Adequate statutory provisions already exist in the Act".

Besides, he said Sebi has norms to regulate CIS in the interest of the investors and the securities market, while RBI is empowered to act against the NBFCs which accept public deposits and do not repay.

"Further, at the instance of RBI, 14 states and 2 Union Territories (UT), including the State of Assam, have enacted special laws to protect the interest of depositors in financial institutions, which adequately empower the state agencies to take action against any scheme promising abnormal return," Chidambaram said.

"The government and RBI have requested the remaining states and UTs to enact the special laws so that there is no vacuum in the regulation of deposit taking activity by the financial institutions and other entities," he added.