CLB supercedes board of mismanaged RBF Nidhi

RBF Nidhi owes Rs 464 crore to about 1.8 lakh depositors and that a sum of more than Rs 464 crore is to be recovered by the company. RBF had apparently advanced over Rs 257 crore to six individuals/entities who have to pay back Rs 436 crore inclusive of interest.

The CLB, in its order, has directed the company to pay the first instalment of Rs 60 crore, which the company is hopeful of collecting by June 30, 2000. As per these directions, all the shareholders number 42,000 who have invested upto Rs 2,000 will be paid in full and all others at 10 per cent of the deposits subject to minimum of Rs 2,000.

The CLB has also directed that the interest on the deposit will be frozen as on November 1, 1998 and depositors of over 80 years will be paid their deposits in full subject to maximum of Rs 50,000.

The RBF episode is the latest in the series of defaults by NBFCs, chit funds and nidhi companies. Such nidhi companies were once good examples of channelising the savings of small investors, but they have of late become stories of mismanagement, diversion of funds and defaults.

“These companies come out with tall claims and promise higher returns to lure common investors. They pretend to give good service initially. Subsequently, when they get the confidence of investors, they start siphoning of funds. Hundreds of such nidhi and chit companies are functioning in the state of Maharashtra, Tamil Nadu, Bihar and West Bengal,” said an investor.

The collapse of RBI Nidhi indicates that the situation has not changed in the financial sector even after a series of scandals like CRB, JVG Finance, DSJ Finance, Helios, Prudential and so on. Lax regulations and lack of strict vigilance and monitoring have become sufficient incentives for shady promoters to get away with public funds.