Manappuram Finance warned off deposits

 

Manappuram Finance warned off deposits

Mumbai: Cracking the whip on the illegal activities of gold loan companies, the Reserve Bank of India (RBI) on Monday asked Manappuram Finance Limited, a leading financial services firm that provides loans using gold as collateral, not to accept or renew deposits from the public.

The RBI has stated that "acceptance of deposits either by Manappuram Finance or by Manappuram Agro Farms (MAGRO) is punishable with imprisonment and has cautioned members of public that those who deposit money with Manappuram Finance or MAGRO do so at their own risk".

It has come to the notice of the Reserve Bank that Manappuram Finance, which is not authorised to accept deposits, has been accepting deposits from the public in its branches and offices has been issuing deposit receipts in the name of Manappuram Agro Farms, a sole proprietary concern of VP Nandakumar who is the executive chairman of the company, the RBI said.

further observed that in some cases instead of repaying the matured deposits, fixed deposit receipts are being issued in the name of MAGRO. In terms of Section 45-S of the RBI Act, acceptance of deposits from the public by MAGRO, which is an unincorporated body, is also prohibited," the RBI said.

Headquartered in Thrissur, Kerala, Manappuram Finance was a company registered with the RBI as a deposit taking non-banking financial company.

However, it became a non-deposit taking non-banking financial company with effect from March 22, 2011.

"Acceptance of deposits from the public, including renewal of matured deposits by that company, thus, amounts to contravention of the terms and conditions of the certificate of registration currently held by it and the directions issued to the Reserve Bank and thus punishable under the Reserve Bank of India, 1934 (RBI Act)," the RBI said.

Manappuram Finance reported a profit after tax of Rs 160 crore up 117 per cent year-on-year) and an overall asset under management (AUM) of Rs 12,400 crore (up 90 per cent YoY) during the third quarter ended December 2011

Source: Financial Express 07/02/2012