Yet Another Nidhi Firm Goes Bankrupt

Panic seems to have triggered off a rush for withdrawals which meant the promoters were unable to return the money of all those who wanted to foreclose their deposits with either Devi Gold House or GNS Nidhi. These unincorporated bodies have managed to garner huge amounts almost overnight from naive (and greedy) depositors by offering unheard-of interest rates that go up to even 36 per cent after taking into account the various upfront incentives and commissions.

To lure the gullible depositors, these firms went on an advertising blitzkrieg. All local satellite channels were bombarded with ads highlighting the very high interest rates and the incentives being offered. Already, it may be recalled, depositors who had put in their money into at least three other companies -- Sneham Finance, Thirum-agal Finance and Omega -- have gone bust and the promoters of these firms jailed.

 

All four companies including Devi Gold House were named in a notice that the RBI issued a few months back in local newspapers. The public interest advertisement published prominently in all leading dailies warned depositors against putting their money into such outfits. Since most of these firms have been registered as partnership firms, they do not come under the ambit of the Reserve Bank of India, nor are they governed by the provisions of the Companies Act.