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Depositors Stunned by RBI’s Benevolence to Jaiprakash Associates
Fixed deposit (FD) investors of Jaiprakash Industries are shocked. On 21st April, The Economic Times reported that the Reserve Bank of India (RBI) had removed 20 companies from the list of 150 entities whose loans had to be provided for by banks against risk of default. One of these was the beleaguered Jaiprakash Associates which figures in Moneylife Foundation’s survey (1,596 complaints) among the top six companies that have the maximum complaints regarding failure to pay the principal or interest on FDs. 
 
While banks celebrate the fact that not providing for the loans will help their bottomlines, hapless depositors are in shock. Worse still, the company has selectively paid a few investors, especially those who had invested through agents who were large fund mobilisers. Media reports also indicate that the RBI breather has followed the Jaypee group’s effort to cut it massive outstanding debt of Rs75,000 crore and its intention to hire experts to restructure its business. Jaiprakash Associates alone has a debt of Rs21,731 crore, according to a Credit Suisse report. 
 
As a proportion of its outstanding, the FD component of Jaiprakash’s debt is bound to be really small and it would be a smart move, reputation-wise, if the company decided to pay them back. A little nudge from the ministry of corporate affairs (MCA) would have made a difference; but it has shown no interest. SD Israni, a well-known lawyer and company secretary and columnist, however, offers an interesting perspective. He says that although the Companies Act, 2013 had not included any provision to punish defaulting companies and their officials, the National Democratic Alliance (NDA) has, in fact, made amends. Section 76A, was inserted into the Companies Act on 29 May 2015 providing imposition of heavy fines and imprisonment for defaults. However, there is a catch. Mr Israni points out that the provision remains a paper tiger because the tribunal that can exercise the power has yet to be constituted and the CLB (company law board) cannot exercise these powers. 
 
Abhay Datar, consumer activist and former banker, points out that Section 76(1) requires companies to create a charge on fixed assets equivalent to the amount of FDs raised. Does this mean that FD-holders are secured creditors, he asks. But here, too, he points out that there is no clarity on whether this would be a first charge or a second charge on the assets. When it comes to small depositors, MCA clearly moves at snail’s pace. So what will push the MCA to give teeth to Section 76A and protect depositors? We are still looking for answers. Meanwhile Moneylife continues to advise savers to avoid investing in corporate FDs lured by a slightly higher interest rate and endangering the principal invested. 
 
NOTE: We at Moneylife request all readers not to share their mobile number/s here. This is a public platform and your mobile number/s may be misused. Kindly do not post your mobile number/s.

User

COMMENTS

T V Sundaram

1 week ago

I am also one of the victims - a Super Senior Citizen having crossed 80 years - expecting a refund of a Fixed Deposit matured on the 1st of December 2015 from JAIPRAKASH Associates Limited. I hope someone will take a lead and proceed to reach to its logical end.

George Williams

1 month ago

Natrajan sir.well said

Rajan Mathikere

1 month ago

FD investor's join together & file case in NCLT & then for decree & see that investors should get thier hard earned money with interest M.Natarajan

Rajan Mathikere

1 month ago

FD investor's join together & file case in NCLT & then for decree & see that investors should get thier hard earned money with interest M.Natarajan

Mahesh Bansal

1 month ago

I am an agent for selling JP associates fd. I am mostly sold fdr's to the senior citizens some of them suffering illness due to old age i.e 65yrs +. The owner of JP associates are enjoying freely due to the regular relieve is being give why CLB extending time to stop FDR payment regulerly. so that petty investor not get any relief.Every investor will consider that why CLB extending the time regularly. I think there is something inside story of the decision of CLB 9412267436.

Mahesh Bansal

1 month ago

I am an agent for selling JP associates fd. I am mostly sold fdr's to the senior citizens some of them suffering illness due to old age i.e 65yrs +. The owner of JP associates are enjoying freely due to the regular relieve is being give why CLB extending time to stop FDR payment regulerly. so that petty investor not get any relief.Every investor will consider that why CLB extending the time regularly. I think there is something inside story of the decision of CLB 9412267436.

Mahesh Bansal

1 month ago

I am an agent for selling JP associates fd. I am mostly sold fdr's to the senior citizens some of them suffering illness due to old age i.e 65yrs +. The owner of JP associates are enjoying freely due to the regular relieve is being give why CLB extending time to stop FDR payment regulerly. so that petty investor not get any relief.Every investor will consider that why CLB extending the time regularly. I think there is something inside story of the decision of CLB 9412267436.

Mahesh Bansal

1 month ago

I am an agent for selling JP associates fd. I am mostly sold fdr's to the senior citizens some of them suffering illness due to old age i.e 65yrs +. The owner of JP associates are enjoying freely due to the regular relieve is being give why CLB extending time to stop FDR payment regulerly. so that petty investor not get any relief.Every investor will consider that why CLB extending the time regularly. I think there is something inside story of the decision of CLB 9412267436.

Mahesh Bansal

1 month ago

I am an agent for selling JP associates fd. I am mostly sold fdr's to the senior citizens some of them suffering illness due to old age i.e 65yrs +. The owner of JP associates are enjoying freely due to the regular relieve is being give why CLB extending time to stop FDR payment regulerly. so that petty investor not get any relief.Every investor will consider that why CLB extending the time regularly. I think there is something inside story of the decision of CLB 9412267436.

MDT

1 month ago

We at Moneylife request all not to share their mobile numbers. This is a public platform and your mobile number/s may be misused. Kindly do not post your mobile number/s.

Shankar Mazumder

1 month ago

https://www.change.org/p/can-narendra-modi-s-pro-business-government-save-the-ordinary-retail-investors-who-have-put-their-life-savings-into-jai-prakash-associates-company-fixed-deposits Click on the above link. Sign up to this online petition and share this petition on facebook, twitter & linkedin

Shankar Mazumder

1 month ago

https://www.change.org/p/can-narendra-modi-s-pro-business-government-save-the-ordinary-retail-investors-who-have-put-their-life-savings-into-jai-prakash-associates-company-fixed-deposits Click on the above link. Sign up to this online petition and share this petition on facebook, twitter & linkedin

Shankar Mazumder

1 month ago

Sign up this petition & ensure that JAYPEE Group pays investors & doesn't become next Sahara/Kingfisher/Unitech !!
https://twitter.com/SM_RETIRERICH/status/850024822587351040

REPLY

Ketul Savla

In Reply to Shankar Mazumder 1 month ago

Signed the petition. Thanks. There are some messages to add in some whats app group. Can some one please add me to this group. - 9870545334

vipul mittal

1 month ago

Please add me to WhatsApp group 9814665622.

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