Give Priority To Solving Madras Motor Fin Scam, Say Depositors

The countrys first known collapse of a non-banking finance company - the Rs 100 crore Madras Motor Finance scam - is elder to the CRB scam by two years, but is hardly getting the nation-wide attention that the

Bhansali affair gets, depositors complained. The Central Depositors Association, a body of depositors with investment in incorporated finance companies, yesterday urged the union government to order a CBI probe into the affairs of Madras Motor Finance and Guarantee Company, on the lines of action being taken in the CRB case.

CR Narasimhan, president of the association, said that the company, acquired by takeover tycoon P Rajarathinam in 1994, had not paid deposit and interest dues since august 1995.

Though civil suits had been filed against the company in the Madras high court by depositors and secured creditors, neither the union government nor the Tamil Nadu government had taken any concrete steps to ensure investor protection, he alleged.

Madras Motor Finance, promoted by Sivan Nair, who later sold it to Rajarathinam, had a total liability of Rs 100 crore, of which about Rs 60 crore was due to individual depositors, he said. Narasimhan claimed that Madras Motor Finance had invested in Nairs companies, which had led to the collapse.