Tribunals Likely For Nbfc Dues

The government is planning to set up tribunals for the recovery of dues from defaulting non-banking finance companies. The tribunals will help in the speedy repayment of fixed deposits from these companies.

The present recovery mechanism, which goes through the judicial process, takes years to deliver justice.

The government has also set up an Economic Intelligence Council, to be chaired by the finance minister and other members from the Securities and Exchange Board of India, Directorate-General of Foreign Trade, Department of Company Affairs, Central Bureau of Investigation and Intelligence Bureau.

The council will identify measures to combat fraud and to create a network among various enforcement agencies for a synergistic and multi-pronged approach to fight fraud.

 

"We will make public the list of the 108 defaulting NBFCs and their directors as part of the precautionary measures and increase public awareness about these companies," P L Sanjeeva Reddy, secretary in the Department of Company Affairs said here yesterday.

He was speaking at a conference on frauds organised by the India chapter of the Association of Certified Fraud Examiners.

The Investor Protection Fund will be used to educate investors and sensitise them to the need for exercising due diligence before investing, Reddy said.

The fund, to be created as a trust, will be headed by the chairman of the Department of Company Affairs and will include members from Sebi.

Reddy said the move to make the names public was due to the large number of NBFCS that had defaulted on repayment of fixed deposits even after an order was passed by the Company Law Board.

He said the issue of more powers to the Company Law Board for repayment of fixed deposits by NBFCs was being discussed.

Reddy urged all regulatory and enforcement bodies to come together to detect crimes in the corporate sector as well as government bodies.

He expressed the need for a new code of corporate governance, encompassing all from the top to lower level management, to reduce the scope of fraud.

Reddy called upon members of the ACFE to document cases of fraud to educate people, to set up the modus operandi of fraud testing, to create a list of do's and dont's for people and adopt pro-active strategies and not reactive strategies to check fraud.

According to the India Fraud Survey 1999 by global consultancy firm KPMG, in the past five years corporate India has reported total losses due to fraud in excess of Rs 500 crore and the biggest reported fraud was about Rs 150 crore.