Rbi'S Slumber

The failure of the CRB Capital Market is yet another feather in the cap of Reserve bank of India in their failure in timely follow up. If only they had taken enough care earlier they would not have permitted CRB Capital Markets Ltd to float a new bank. If there is any other statutory authority who also fails to protect the investor's interest it's only Sebi.

There are a number of companies who come out with a public issue and, after collecting money, the funds are diverted for other purposes for which it was not originally intended. As a practising Chartered Accountant, I have come to know that in the case of M/s Gremach Tea & Estates Ltd, Chennai. The company during 1995 came out with a public issue for about Rs 14 crore and they also raised a bridge loan from Punjab & Sind Bank, Chennai, to be repaid once the issue is subscribed. However, the loan collected by way of public issue was totally diverted by the company and this fact is also known to all concerned including RBI, Sebi and Punjab & Sind Bank. Even then, no action was taken to save the investors' interests. The bridge loan of Punjab & Sind Bank is also yet to be adjusted. I further understand Bharat Overseas Bank Ltd, one of the lenders to the above company , had already given a complaint to the authorities including Sebi and RBI about possible misuse of funds and no action has been taken so far. This only shows that both RBI and Sebi do not take timely action and prevent any loss to the public. They come into the picture only after everything is lost to the detriment of the investing public. Unless RBI/Sebi wakes up from this slumber, it will not be possible to protect the investors at all.