Crb May Be Barred From Merchant Banking
The Securities & Exchange Board of India (Sebi) is examining the options for initiating action against the CRB group. According to Sebi executive director Vijay Ranjan, if the merchant banker, CRB Capital Markets, does not have adequate net worth to function as a merchant banker, it is likely to be barred from taking up such activity.
Since the irregularities in the functioning of the merchant banker, CRB Capital Markets, as a non-banking finance company have come to light, the capital market regulator will have to examine their implications on its functioning as a merchant banker. Prima facie from the newspaper reports it appears that CRB may not have the requisite net worth to continue functioning as a merchant banker, says Ranjan.
CRB Capital Markets is also the sponsor of the asset management company that floated the mutual fund scheme of the group: Arihant. Commenting on the nature of action that Sebi can take under the existing regulations, Ranjan said: If there is an erosion of net worth, it may not be able to undertake any fund-based activity such as underwriting or portfolio management. It remains to be examined if it can be allowed to function as a merchant banker.
The RBI has already issued a notice to CRB to disclose its asset position to pay the depositors by Tuesday. RBI also plans to wind up CRB if it fails to clear its dues.
BSE for indefinite suspension of stocks
The Bombay Stock Exchange (BSE) has written to the Securities & Exchange Board of India (Sebi) seeking permission to indefinitely suspend all four CRB group stocks: CRB Corporation, CRB Capital Markets, CRB Share Custodial Services and the mutual fund scheme, CRB Arihant Mangal.
The bourse has already suspended two group stocks