Rbis Flaw

The CRB bubble has burst leaving small investors wounded.

Still the Reserve Bank (RBI) the apex Bank continues to turn a Nelsons eys to misleading advertisements and intricately laid out schemes of financial frauds. This is to draw the attention of all gullible investors in addition to RBI to advertisements by Southern Horticulture and Rubber Plantations Ltd (SHRP), promising 24 per cent pa. Tax free returns against the security of nationalised bank guarantee in the form of fixed deposit. If RBI officials read newspaper advertisements they ought to have inquired from the nationalised banks if any of them has issued such guarantee to SHRP. Some years back nationalised banks were instructed by the RBI not to lend their name in such transactions for obvious reasons. Therefore, it was expected of RBI to have explained investors through press release that no such guarantee could be given by any Bank after the bitter experience of CRB scam has initiated such action at all in the interest of the investors.

Such misleading advertisement lure gullible investors to fall in the trap of fly by night operators, which is the bitter experience of victims of CRB. In the case of CitiBank I had drawn the attention of RBI to a misleading advertisement to attract depositors. While RBI failed in its duty, the Advertisement Standard Council of India acted to pull up the Citi Bank.