RBI Starts Scrutiny of Companies Suspected of Illegal Money Raising: Report

New Delhi: As part of its efforts to protect gullible investors from fraudulent investment schemes, the Reserve Bank of India (RBI) has started scrutinising credentials of companies suspected of illegally raising money from public as non-banking finance companies (NBFCs).

The apex bank's action follows the Corporate Affairs Ministry sending a list of more than 34,700 firms that came under its scanner for allegedly pooling money as NBFCs.

The ministry had prepared the list early last year when Rs 10,000-crore Saradha chit fund scam - one that duped thousands of investors of their hard earned money - came to light.

Sources said the Reserve Bank of India (RBI) has begun analysing details of entities believed to have raised money from the public illegally without getting registered as NBFCs.

The cases are being pursued after reference from the Corporate Affairs Ministry to probe 34,754 companies (other than those registered with RBI). NBFCs are regulated by the RBI.

Sources said all the entities under the scanner would be provided an opportunity to clarify their position before taking action.

The exercise has revealed that 4,102 companies were registered with the RBI as NBFCs.

In the second stage, sources said, the RBI focused on the remaining 30,652 companies and it revealed that 13,647 companies are not meeting the business criteria requiring certificate of registration for functioning as NBFC. Further, complete information on 6,182 companies is not available in the Ministry website and 4,125 companies are under liquidation.

Of the remaining 6,698 companies, only 213 are accepting public deposits and 1,643 are meeting business criteria for NBFC certification, sources said, adding that 4,842 companies are ineligible for registration as NBFCs.

Sources also said that the RBI has reported that there are 543 NBFCs operating in different states and Unions territories which are not registered with the apex bank, against which complaints regarding non-payment of investors' money have been received or noticed by the RBI during the three calendar years till June 30, 2014.