The Hindu Business Line : Lloyds Finance `fails to repay investors' despite CLB order

LLOYDS Finance Ltd, a non-banking finance company, has failed to implement the directives of the Company Law Board (CLB) on repaying investors here, their dues.

A cross-section of investors told Business Line that the company had turned a blind eye to their repeated appeal for settlement of dues.

Lloyds Finance approached the CLB, Western Region Bench in Mumbai in the late 90s when it faced a severe financial crunch, to seek time to repay its depositors.

Pursuant to the provisions of Sec 45QA(2) of the RBI Act, the Bench had passed an order rescheduling the repayment chart.

It had directed that amounts up to Rs 25,000 be paid within a period of three years from the date of the order (April 16, 1999). The repayment was staggered.

The company was also directed to pay interest at the contracted rate till the date of maturity of the deposit and thereafter at 12.5 per cent till the date of payment for the delayed period.

Lloyds Finance repaid the first instalment due after a delay of over six months, and thereafter started defaulting.

Meanwhile, it appears that the company had approached the CLB seeking further time for repayment and the schedule was revised in December 2000.

The board had given extensions. For deposits up to Rs 5,000, which was payable within three months as per the earlier order, the time was extended by another three months, while for deposits between Rs 5001 and Rs 10,000, the company was given time to repay in four instalments at 20, 25, 25 and 30 per cent of the amount instead of the stipulated three instalments.

For sums more than Rs 10001, the amount was payable in five instalments.

Source said that the company had agreed to repay the second instalment due within six months of settling the first (which itself was paid after a delay of six months), but had not done so, till date.

Officials at the local branch were non-committal.

They merely said that they were themselves not sure as they had no communication in this regard from the head office.

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