Global Fin Barred From Accepting Fresh Deposits

Global Finance Corporation Limited (GFC), a company with alleged links with the CRB group, has been prohibited by the Reserve Bank of India from accepting fresh deposits from the public.

This directive from the central bank comes after the non-banking finance company (NBFC) downed its shutters on Thursday following a run on its deposits.

RBI, exercising the powers vested in it under the RBI Act, 1934, has also directed the company not to sell, transfer, create, charge, mortgage or deal in any manner with its property and assets without prior written permission of the bank for a period of six months.

 

This is likely to prevent GFC from floating its proposed mutual fund even if the company commences operations again. The NBFC had obtained approval of the Securities & Exchange Board of India to float the mutual fund. It had even floated an asset management company and a trust company for the purpose.

While little is known about the financial position of the company, the depositors and investors started demanding a refund of their funds after the company's alleged connections with the CRB group came into light following the CRB scam.

Four days ago, GFC had downed its shutters as depositors of the company started queuing up for pre-mature withdrawal of deposits. As in the CRB case, the promoters R K Jain, a director with CRB, and B K Bhansali, a cousin of CRB group promoter C R Bhansali, as well as the directors of GFC are absconding.

On Wednesday, the National Stock Exchange had shut down the trading connectivity of the company's stock broking subsidiary GFC Securities.

According to GFC sources, the total liability of the company in terms of fixed deposit is said to be Rs 6 crore. Source added that the liabilities can be met by appropriate liquidation.

While the directors of the company deny any link with the CRB group, the balance sheet for 1995-96 reveals that GFC's largest shareholder is CRB Share Custodian Limited. According to the balance sheet, the company had an equity of Rs 19 crore. The company had an investment portfolio of Rs 4.59 crore of which Rs 3.92 crore were in unquoted stocks.