Maharashtra Minister Subhash Deshmukh’s Lokmangal Agro’s Bank, Demat Account Attached
Market regulator Securities and Exchange Board of India (SEBI) has issued attachment orders against Lokmangal Agro Industries and seven of the company directors for failing to refund Rs74.82 crore to investors. The Lokmangal Group is associated with Maharashtra’s minister for cooperative, Subhash Deshmukh, whose wife Smita is one of the directors against whom SEBI has passed the order.
 
Earlier on 16 May 2018, SEBI had asked Lokmangal Agro and its directors, Smita Subhash Deskhmukh, Vaijnath Nagappa Lature, Audumber Sandipan Deshmukh, Shahaji Gulchand Pawar, Gurrana Apparao Teli, Mahesh Satishchandra Deshmukh and Parag Suresh Patil to refund funds worth Rs74.82 crore collected from investors with an interest of 15%. However, the company and its directors failed to refund the money to investors and did not furnish any report of repayment. 
 
In its recovery proceeding orders issued on 3 January 2019, Jai Sebastian, deputy general manager and recovery officer of SEBI, says, “Till date, the defaulters have not replied and field any asset details. In these circumstances and as per the conduct of the defaulters, there is likelihood that the defaulter/s  may take out the funds or securities from their bank or demat account…in order to protect the assets from any sort of alienation, it is necessary to attach the bank, demat and mutual fund accounts to prevent the defaults from removing or concealing the same.” 
 
Lokmangal was banned from the securities market for at least four years. The funds were raised in contravention of the provisions of the Companies Act and Issue of Capital and Disclosure Requirements (ICDR) Regulations, the regulator said.
 
Lokmangal group from Solapur was headed by minister Deshkumkh, however after he was inducted in the state cabinet, he handed over the reins of the group to his son. However, the Lokmangal group has been under the regulatory lens of various authorities.
 
Besides the notice from SEBI, earlier in November 2018, Maharashtra government had asked the district dairy development officer from Solapur to file a first information report (FIR) against Lokmangal Multistate Cooperative Society, headed by Mr Deshmukh. This was result of cancellation of Rs24 crore contract given to the society by the department. 
 
“A report submitted by the animal husbandry department had concluded that Mr Deshmukh’s society submitted forged and fabricated documents from the Maharashtra Pollution Control Board in Pune and Solapur; the Industrial Security and Health Department, Solapur; the Food and Drug Administration, Solapur; and Deputy Divisional Engineer, Public Works Department, North Solapur,” says a report from the Hindu.
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Bombay HC Refuses To Stay RBI's 31st Dec Deadline for Kotak Mahindra Bank
The Bombay High Court on Monday refused to grant a stay on the deadline given by Reserve Bank of India (RBI) to Kotak Mahindra Bank for dilution of promoter stake. The RBI had given a deadline of 31 December 2018 for diluting the promoter's stake in Kotak Mahindra Bank. With the High Court’s refusal to grant a stay, Kotak Mahindra Bank had to follow the 31st December deadline given by the central bank. 
 
Last week, Kotak Mahindra Bank had filed a writ petition against RBI to validate its position over dilution of promoter stake. In August this year, the central bank had rejected the Bank's position saying that issuance of perpetual non-convertible preference shares (PNCPS) by Kotak Mahindra Bank does not meet the dilution requirement of promoter stake.
 
In a regulatory filing, the lender had said, "We had clarified and conveyed to the RBI our position in relation to PNCPS being a part of paid up capital and the legal basis on the matter of dilution of shareholding under the Banking Regulation Act.
 
"We had also shared with the RBI the opinions of eminent jurists and senior-most legal counsels of the country which confirm our understanding. However, we have not heard from the RBI on the above matter. Given the milestone of 31 December 2018, the Bank has been left with no option but to protect its interest. By way of abundant caution, the Bank has today filed a writ petition with the Bombay High Court to validate the Bank's position."
 
Following RBI's directions, on 2 August 2018, Uday Kotak, promoter of the Bank, had sold about 1 billion PNCPS to domestic institutional investors and companies.
 
The sale, at Rs5 per share or at about Rs500 crore, helped the promoter to reduce his stake to 19.7% from 30%.
 
The next hearing in the case is scheduled for 17 January 2019.
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RBI governance structure need further examination, says board
The central board of Reserve Bank of India (RBI), which met under new Governor Shaktikanta Das on Friday, said the governance structure of the central bank needs further examination before deciding on whether it can be board-driven.
 
"The board deliberated on the governance framework of the Reserve Bank and it was decided that the matter required further examination," the RBI said in a statement. 
 
RBI's governance is a major bone of contention between the government and the bank, which led Urjit Patel to quit as RBI Governor on Monday. The government wants RBI to be driven by the board instead of the Governor, as is currently the case.
 
Under the current structure, the board has 18 directors including four Deputy Governors, four Directors from the RBI's local boards, two government nominees and others appointed by the government. Many of these appointments to the board are political. 
 
With non-technical people (non-economists) as Directors in the board of the central bank, the final word on any economic policy by the RBI is that of the Governor. However, the Central government wants the RBI Governor to be accountable to the board.
 
The board also reviewed other contentious issues like liquidity in the economy and credit in the market which soured the relationship between the government and the central bank over the past several months, with the government wanting the RBI to intervene. 
 
"The board reviewed, inter alia, the current economic situation, global and domestic challenges, matters relating to liquidity and credit delivery to the economy and issues related to currency management and financial literacy," the statement said.
 
It was the first board meeting under the chairmanship of Shaktikanta Das, who was earlier Economic Affairs Secretary in the Finance Ministry and one who steered the monetary situation in the country post-demonetisation. 
 
The draft report on Trend and Progress of Banking in India (2017-18) was also discussed at the meet, the RBI said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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