Money & Banking

Act against firms not operating from registered address, RBI tells Govt

K Ram Kumar Mumbai | Updated on January 22, 2018 Published on September 03, 2015

CHENNAI, 16/03/2015: Logo of the Reserve Bank of India. Photo: B. Jothi Ramalingam

Says many complaint letters on unauthorised collection of money return undelivered



The Reserve Bank of India is irked about companies that do not operate from their registered address and collect money and deposits from consumers without authorisation. The central bank has asked the Ministry of Corporate Affairs to take action against such companies.

This comes in the backdrop of the RBI coming across instances where complaint letters of unauthorised financial activity sent to the company’s registered address were returned undelivered. Thousands of gullible investors have been losing their life savings in investment schemes floated by fly-by-night operators from time to time and this has become a cause for concern for the government, the banking regulator and the market regulator.

Validate address

The RBI has underscored the need for having a system at the Registrar of Companies (RoCs) to validate the address submitted by a company as the online addresses were incorrect.

According to the MCA, ‘not maintaining their registered offices’ is one of the three criteria for considering a company as ‘vanishing’. The other two criteria are — non-filing of statutory returns with the RoCs and stock exchanges in accordance with the listing agreements for a continuous period of two years, and non-correspondence between the stock exchange and the company for a long time.

Non-payment of public deposits topped the list of complaints dealt with by the RoCs in 2013-14. These complaints accounted for close to 16 per cent of the total 4,814 complaints. In 2013-14, the RoCs received 762 complaints of non-payment of public deposits against 269 in the previous year.

Meanwhile, Bharatiya Janata Party Member of Parliament (MP) Kirit Somaiya has requested the authorities, including the Finance Ministry, RBI, Serious Fraud Investigation Office and Mumbai Police, to come up with a time-bound action plan against the 162 fraudulent or Ponzi schemes and chit fund companies identified by the Securities and Exchange Board of India.

The capital market regulator had circulated the names of the 162 identified companies to the authorities about seven months ago.

The Lok Sabha MP from North-East Mumbai said, “It is understood that these companies with illegal and diversified businesses are floating various projects… wherein prominent personalities are invited and this misleads the common man as well as small investors.”

Published on September 03, 2015

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