SEBI and RBI toughen stand on NBFCs in Bihar

State govt asks all the district magistrates take stringent actions such companies

Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) on Thursday informed the state government that no non banking financial companies (NBFC) have been allowed to take deposits from Bihar.

The state government, in turn, asked all the district magistrates (DMs) take stringent actions such companies.

The market regulator has especially flagged the operations of four companies, including Kolkata based Rose Valley Group of Companies.

"To counter the menace of dubious NBFCs in the state, we convened a high level meeting on Thursday to deal with such companies," said Deputy Chief Minister of Bihar Sushil Kumar Modi, "Senior officials of SEBI, RBI, State Police's Economic Offence Unit (EOU) and Ministry of Corporate Affairs were present in this meeting. Our focus is to develop such a mechanism through which investors' interests be protected."

"In this meeting SEBI and RBI have clarified that no working NBFCs have been given licenses to operate in the state, yet several such companies are doing businesses. Therefore, we have decided to take strong actions against such errant companies," added Modi, who also heads Finance Department.

The state government has given orders to all DMs to identify such companies and close their operations.

"The Bihar protection of interests of Depositors Act, 2002 clearly states the steps which can be taken against such companies.

The assets of such companies can be sold off to compensate the depositors under the provisions of the mentioned act. We will invoke this act to protect the interests of investors of such companies," comment the deputy chief minister.

He also mentioned that the state government has taken strong actions against Prayag Group, Vishwa Mitra Group and several other companies. However, the state government does not have the exact number of NBFCs operating in Bihar, which makes it difficult for the state government to identify and close these companies.