Rbi Sets Terms For Peerless Gen Finance Turnaround

The Reserve Bank of India (RBI) has stipulated a number of crucial, and specific guidelines for effectively monitoring the turnaround plan for Peerless General Finance & Investment Co (PGFIL).

PGFIL is the country's largest residuary non-banking finance company (RNBC).

The apex bank has instructed PGFIL to form a superlative committee of directors with chairman D N Ghosh, managing director S K Roy, and directors S M Datta and D Basu as members to supervise the implementation of the turnaround plan and report to the RBI on a quarterly basis on the progress achieved.

The company should urgently appoint three to four professionals as part of the senior management team of the company for effective control over its expenditure and administration.

 

While the central bank has asked Peerless to induct a chartered accountant in the audit committee of the board, the RBI is also quite clear on the fact that the investment committee of the company needs to have expertise in investment decisions.

This apart, the Reserve Bank has urged PGFIL to make an all-out effort to reduce its non-performing assets (NPAs) and disengage itself from associate and group companies in a time bound manner to reduce overheads and increase profitability.

In its turnaround plan, Peerless General Finance & Investment has suggested there should be a reduction of two per cent in the rate of return to depositors with respect to discontinued deposits, which is now being examined by the RBI. These key decisions have been taken following the deliberations at a meeting by the Reserve Bank deputy governor, S P Talwar.

A few months ago the apex bank had asked the city-based company to submit a restructuring blueprint, following which it was presented to Talwar.

The RBI has also conducted an inspection into Peerless' investment pattern to look into whether the company made investments according to the central bank's norms.

In 1996-97, PGFIL ran up a net loss of Rs 30.82 crore while its total assets increased from Rs 4,808 crore to Rs 5,520 crore. Currently, the company is redesigning its commission structure within the permissible limits. PGFIl is a closely-held company with managing director, Roy, holding about 70 per cent stake. Other shareholders include Poddar Udyog, R L Gaggar, T K Ghosh and Bhagwati Developers.