For preventing unscrupulous Non-Banking Financial Companies (NBFCs) from cashing in on unsuspecting public’s gullibility, Punjab Government has intensified its action against them.
As a part of this, high-powered State-level coordination committee on NBFC, constituted under the chairmanship of Punjab Chief Secretary Sarvesh Kaushal, held its meeting on Tuesday where it was decided that a tough stand would be taken against the unscrupulous NBFCs operational in the State and collecting money from public under various lucrative schemes with fraudulent intentions.
The Government officials and experts, during the meeting, expressed serious concerns over the mushrooming of NBFCs under the garb of providing financial benefits to the public.Chief Secretary Kaushal maintained that the financial incidents under chit fund operations occurred in the eastern part of the country are eye openers for financial regulators and the Government.
The meeting discussed that to check these economic offences, public needed to be sensitised and at the same time State needs to keep a close watch at the working of such NBFCs.
RBI officials, present in the meeting, apprised that two types of NBFCs are being registered under the Act formulated by the apex banking institution. “Category A, which are authorized for accepting deposits from public; and Category B, which are not authorized for accepting public deposits. Currently, 60 Category A and 260 Category B NBFCs from Punjab have been registered with RBI,” he said.
RBI is minutely supervising activities of registered NBFCs and is cancelling their Registration Certificates where it finds that financial irregularities are committed.As per RBI data, since 2006, Certificate of Registrations of 19 Category A and 29 Category B NBFCs of the region have been cancelled by RBI Chandigarh office for non-compliance of various RBI guidelines, the list of which is available on the State Government websites for convenience of general public.
SEBI also provided a list of nine companies to the State Government, which are not being operated in accordance with the SEBI guidelines. Chief Secretary assured to initiate appropriate action against these erring companies.Chief Secretary informed that the Punjab Cabinet has already approved the Punjab Protection of Interest of Depositors’ Bill, 2014, and before it is passed by the State legislature, the draft of the Bill has been forwarded to the RBI and SEBI for comments “within a month”.
“State has already notified Additional Deputy Commissioner (Development) of all districts as Joint Director, Institutional Finance and Banking. All ADCs have been directed to collect information on various NBFCs working in their jurisdiction,” said Kaushal.He said that the information thus collected would be supplied to RBI and SEBI for initiating action against fraudulent entities.
For proper coordination between RBI, SEBI and the State Government on this issue, the Chief Secretary constituted a committee under the chairmanship of Principal Secretary Home.The committee would examine all concerns put forward by the RBI and SEBI and redress issues within stipulated time period.Further to build capacity of Police officials to handle such cases of fraudulent activities by NBFCs, the Chief Secretary asked RBI to conduct a one-day workshop for senior police officers and five-day workshop for field level officials.