A preliminary report on the investigations is likely to be submitted soon by SFIO, but the final report may take little longer, corporate affairs minister Sachin Pilot said
The Serious Fraud Investigation Office (SFIO) is likely to submit its probe report on alleged fraudulent money collection schemes being run by 54 entities, including Kolkata-based Saradha group, in the next 2-3 months.
A preliminary report on the investigations is likely to be submitted soon by SFIO, but the final report may take little longer, corporate affairs minister Sachin Pilot said.
In late April, the government had ordered an SFIO probe into these companies in the wake of alleged swindling of investors money worth thousands of crores by Saradha group.
The investigations are being conducted by a special task force set up by SFIO.
“They (SFIO) will soon be giving me a preliminary report on the investigations so far. They have done enough work, but sometimes they are not getting details. So, it is taking little longer,” Pilot said.
“I think in the next two to three months, we will have the final report,” he said.
The investigations were initiated amid raging public protest over the Saradha case, which came to be known as “chit fund scam” in West Bengal and other Eastern and North-Eastern states, despite the businesses run by those entities not actually being registered chit funds.
Besides Saradha group entities, the SFIO is investigating companies from many other groups such as Rose Valley, Icore E-Services and Sunshine India Land Developers. As per the ministry’s directive to the SFIO, 14 Saradha group entities including Saradha Realty India, Saradha Agro Development, Saradha Exports, Saradha Construction Company and Saradha Garden Resorts and Hotels are under investigation.
Besides, nine entities from the Sunshine India Land Developers group, 11 from the Icore E-Services group and 19 from Rose Valley group would be investigated by SFIO.
While announcing the probe, the corporate affairs ministry had said the decision was taken in view of the larger public interest involved in such cases, “and concerns regarding misuse/laundering by such companies of the ill-gotten wealth and the possibility that the promoters of these companies may strip these companies”.
Capital markets regulator Securities and Exchange Board of India (SEBI) has already ordered strict actions against some entities of Saradha and Rose Valley groups, among others, for running unauthorised collective investment schemes.
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Why are lenders to Kingfisher Airlines reluctant to sell shares even though they are entitled to do so?
The consortium of lenders, which includes State Bank of India (SBI), ICICI Bank, Axis Bank, which lent money to the beleaguered Kingfisher Airlines (KFA) in exchange for pledged shares, are apparently wondering about a legal course of action even as they are sitting on pledged shares from Vijay Mallya. According to a report in Business Standard, several lenders are unwilling to invoke their 2.38% pledge in United Spirits. This is bizarre move and makes a mockery of pledging shares. Why are the lenders, who are in the process of recovering their dues, unwilling to sell the pledged shares? What is the whole point of share pledging if it is not sold to recover amount due?
Earlier, the Bombay High Court rejected a plea from United Breweries (Holdings) for putting a halt to share sale by lenders. However, the high court ruled in favour of the lenders and allowed them to sell the shares freely in the open market (http://www.livemint.com/Companies/plxgHKiXScWuTcqKBi696M/Bombay-HC-directs-UBHL-to-furnish-500-cr-guarantee.html). Why are the Kingfisher’s lenders not safeguarding their own interests and balance sheets? State Bank of India (SBI) is one of the largest banks in India and gets regular capital injections from the government. It is the taxpayer who has funded Kingfisher’s loan.
According to the latest shareholding pattern of Kingfisher Airlines, United Breweries (Holdings) has a 14% stake in the airline and it is 100% pledged. The other owners of KFA are Kingfisher Finvest India, Dr Vijay Mallya and UB Overseas. Barring Dr Vijay Mallya and UB Overseas, all the shares have been 100% pledged. Four banks namely SBI, IDBI Bank, ICICI Bank and Bank of India collectively own 8.78% of Kingfisher Airlines, as per latest exchange release.
Of over Rs7,000 crore exposure to 17 lenders, SBI has the maximum exposure of over Rs1,600 crore in the airline. It is followed by PNB (at Rs800 crore), IDBI (Rs800 crore), Bank of India (Rs650 crore) and Bank of Baroda (Rs550 crore).
Equity shares are pledged to the lender when a company wants to borrow money but the lender requires collateral, other than immovable property. So, when the borrower fails to pay off the debt as stipulated in the contract, the lender will sell the pledged shares in the open market to make good the loan. If the lenders are not selling the pledged shares, it defeats the very purpose of using shares as a collateral tool.
You can find several stories we’ve written on Kingfisher here.