JVG offices down shutters

MUMBAI, Sept 23: The JVG group has downed shutters at its 65 offices in Mumbai, Nashik and Bihar regions. This follows detection of large s...

MUMBAI, Sept 23: The JVG group has downed shutters at its 65 offices in Mumbai, Nashik and Bihar regions. This follows detection of large scale of irregularities by the company in which JVG8217;s own officials have collected over Rs 100 crore from depositors in JVG8217;s name and issued fake certificates to them.

JVG officials in Delhi said a legal and audit team is flying to Mumbai to scrutinise the documents and subsequently file charges against the erring officials with the police in the next two-three days.

The company said it is quot;suspending operationsquot; from September 14 onwards in these regions as a proper audit has to be carried out on the legitimacy of any depositor8217;s claim for refund. 8220;We do not know which so-called JVG depositor is holding a fake certificate issued by some of our diligent officials and agents,8221; said a JVG official in its Delhi office.

In order to avoid any panic reaction, the official reason given to the depositors is 8220;the company is undertaking massive computerisation in these offices. Hence, the closure.8221; In fact, the company has already filed a police complaint case against a company official on Monday in Punjabi Bagh police station in Delhi and some officers in Bihar. Fearing a run on its deposits, the company has asked its depositors to send all the relevant documents to its Delhi offices and only after proper scrutiny they will issue a cheque. The entire process will take four to five weeks, officials said.

The JVG group consists of JVG Finance amp; Leasing, JVG Securities, JVG Departmental Stores, JVG Housing Finance and JVG Overseas. The group has recently bagged a airline licence from the government of India and also prints a small newspaper from Delhi 8212; JVG Times.

What is appalling is that the company has managed to raise around Rs 1,000 crore, according to company8217;s own estimates, from over 1 lakh depositors spread all over the country. Company insiders in Mumbai say that the group is facing massive liquidity crunch and it will not be possible for them to address the claims of depositors. Following the CRB scam, many depositors have rushed to the JVG group for refund and they are still waiting. In fact, till recently JVG8217;s office in the Bandra-Kurla office was offering 26 per cent return as dividend8217; on non-cumulative deposit scheme. This was far higher than the prevailing interest rate of around 15-16 per cent. JVG Finance was one of the six leading NBFCs closely monitored by the Reserve Bank of India RBI and Securities and Exchange Board of India SEBI after the CRB scam. However, no action has been taken by the RBI till date.

The RBI, however, issued a showcause notice to JVG Finance on March 27 asking the company why it should not be barred from mobilising deposits from the public since it failed to fulfil certain norms governing NBFCs. In fact, the Patna office of the RBI had at that time recommended that JVG Finance should be barred from mobilising public deposits for asset-liability mismatches and non-compliance with Statutory Liquidity Ratio SLR norms.