PACL’s small investors from remote districts are in a panic about their investments, as the company gives them a run-around; but SEBI recovery proceedings can begin only after 11 November 2015, as per SAT order
Lakhs of investors who put their hard earned money in PACL formerly Pearls Agrotech Corp Ltd, a collective investment scheme (CIS), are in a panic about the fate of their investment after the company has been ordered to refund their money. It may be recalled that this company has raised a whopping Rs49,000 crore from people across the country, claiming to have bought them a stake in land, like a land mutual fund. PACL has also used India’s slow legal system very effectively to delay regulatory action for several years, while it continued to collect money from people. In fact, it has doubled the money raised, even after Securities & Exchange Board of India (SEBI) began action against it.
The All India PACL (Pearls) Investors Association, on 13 October 2015, organised a protest-cum-meeting of investors in Parbhani district of Maharashtra. The Association, led by Rajan Kshirsagar, has started collecting applications forms from all investors in PACL, in order to send it to SEBI for further proceeding. Thousands of people from Parbhani district had invested thousands of rupees in PACL and all are now facing a severe financial crunch, which is magnified by the drought in the entire region.
During the meeting, it was decided to call for a protest before the Collector at Parbhani on 2nd November demanding action against PACL. The Association also demanded seizure all assets of PACL by SEBI for refunding money to investors. SEBI should algo create a lien on PACL assets in proportion of money invested by investors, SEBI should create a system to record complaints from investors in Parbhani district within next 15 days. "SEBI should also take action against other 95 companies barred from conducting similar CIS schemes," Kshirsagar said in a statement.
Video recordings by the Association have stories about how people were convinced to become agents of PACL and have ended up persuading their family and friends to invest in the company.
Sangita Jadhav, from Jintur taluka, personally invested Rs1 lakh in PACL. She also made several others to invest money in the CIS. Sangita says she joined PACL in 2009 and brought several people into the scheme. But her condition today is so bad that these investors are continuously asking her for refund of their money and she had to even keep her mobile handset switched off for most of the days as she has no answer. According to her, for more than two years, PACL told her that the company had filed a petition in High Court. "How many times, I can give next dates to people. Even thought people in the PACL office continue to give future dates whenever we ask for refund of our money," she says.
Sangita says, "About 30 people from my village had invested money in PACL. The company stopped paying us since October-November 2013. The bonds, which I submitted for redemption in November 2013, are still unpaid. All investors are now thinking about taking out a morcha to SEBI and seek refund of our money.”
Another investor-cum-agent, Sudhakar Kshetre, says since he was unemployed, he joined PACL in 2007. "PACL had lot of expectations (from us) and since there was no other job available, I started working for them. From then, I made my relatives, friends and other people to invest about Rs10 lakh in PACL. This is apart from my own investment of around Rs30-40,000," he says.
"These people are harassing me for getting their money back. They say we invested money since you asked us to do so and since we do not know the company, you pay back (the money). 'You came to our house seeking money, now, you pay it back' is what people are telling me. Some people are even threatening to commit suicide in front of my doors. But I think, unless we all investors come together and take our case before SEBI, no money would come from PACL," Kshetre added.
Market regulator SEBI, the Securities Appellate Tribunal (SAT) and the Supreme Court have all ruled in favour of investors and directed PACL to refund money. SEBI, in a welcome move has started collecting applications or letters from all investors of PACL, both online and offline and sending it to the company for redressal. As per the order from SAT, the recovery proceedings can be initiated only after 11 November 2015, and till that time, investors will have to only wait.
If this is the situation in one small and remote district of Maharashtra, the plight of investors across India can only be imagined. Moneylife Foundation had written to SEBI asking it to create a separate email or format for PACL investors to lodge their grievances, especially since many are not very literate and are clueless about SEBI and the online complaint filing process of SCORES.
Hopefully, other organisations and activists will be able to help people in the process. Moneylife Foundation has said that it will be happy to work with SHGs and NGOs around the country to collate information in various languages and forward it to SEBI. Those who need its help may contact [email protected] .
Harsh rules, poor awareness can destroy the financial future of a person
It is 15 years since India answered the demand of large lenders, such as banks and finance companies, by setting up the first credit information bureau to track the credit history of individual borrowers. This has placed enormous power in the hands of lenders. Today, by merely reporting a defaulter to the four credit information companies (CICs) permitted to operate in India, a lender can destroy the financial future of a person and banish him/her from the formal credit market. Yes, this is, indeed, as harsh as it sounds.
Since individual borrowers have no voice, the rules are one-sided and unfair to them; correcting them is not a priority for the Reserve Bank of India (RBI). For the past year, Moneylife Foundation (a not-for-profit entity) has run a free helpline to help those who have had payment problems but want to get their financial life back on track. The biggest finding of this helpline is the shocking lack of awareness about credit bureaus, credit history and its implications, even among a large section of educated Indians. The reason is simple. There has been no attempt whatsoever to run public service advertisements to educate ordinary people who do not read business papers. Meanwhile, one-sided rules with harsh implications have been framed to empower lenders. Most people realise they have been listed as defaulters only when they are refused a credit card or a loan; others continue to remain perplexed at the rejection. Some have woken up with fright on receiving legal notices and threats of arrest from asset recovery agents, who have bought bad loans going back 10 years and added a fat, compound interest component to the original payment.
Another reason for the low awareness is the absence of any significant advantage to having a spotless credit record. Unlike most developed nations, a high credit score does not allow you to negotiate better credit terms, whereas a default shuts you out of the formal credit market, instead of allowing you to borrow at a higher interest.
In a country where banks are bailed out for their poor lending practices and where Rs280,000 crore worth of corporate loans are in process of corporate debt restructuring (as on 31 March 2015), the financial system is completely unforgiving for those who may have defaulted or disputed even a few thousand rupees. Even when a disputed payment is mutually is ‘settled’ with a lender, it is reflected in a person’s credit record and leads to denial of fresh credit, or even a credit card. While our rules say that Indians can ‘rebuild’ their credit score, most people don’t even get that second chance of a loan at a higher rate, because most lenders do not have systems in place to provide it. Similarly, our rules say that your bad credit record will remain on record for seven years. In reality, our credit bureaus do not wipe out negative data at all. In the United States, the Fair Credit Reporting Act clearly restricts how long negative items can remain on credit records. It is seven years for most data and 10 for bankruptcy declarations. Many developed nations wipe records after six years. It is called the ‘Right to be Forgotten’.
Moneylife Foundation has innumerable examples of people who defaulted in 2004-05 and are still being chased by recovery agents with hugely inflated claims. Or they are being denied a new loan, 10 years after a previous default. In fact, lenders’ excesses and indiscriminate lending in 2006-08 had led the maximum number of people being reported as defaulters. It is time the victims got fairer rules. If your loan or credit card application has been repeatedly rejected, wake up now. Check your credit report and email us with details. It is time to speak up and ensure that lenders cannot remain unforgiving of small individual defaults while large corporate defaulters are routinely bailed out by the exchequer which recapitalises banks every few years.
The new black money law has been intentionally made harsh because the government is tacking a problem which normal law were not able to address for so many years, Central Board of Direct Taxes (CBDT) chairperson Anita Kapur said on Tuesday.
"We owe it to the country to ensure at least law is clear and the law is stringent so that the menace is handled," she said at an event on taxation organised by the PHD Chambers of Commerce and Industry.
Kapur also said that government is willing to respond on industry's concerns raised on procedures to be followed under the new black money law.
"We have been issuing FAQs. On compliance window we issued three sets of responses to the queries raised, we are open to issue responses to what you find problematic in the procedures on the black money," she said.
The CBDT chief also said her department was trying to address issues on the administration side but advised the industry not to overplay such issues.
"We do not want to recover taxes which we are not entitled to recover, we want taxes which as per our law, we have been obligated to recover," she said.
"Less than one percent of taxpayers get to see our offices, 99 percent of taxpayers do not need to come to our offices. We accept their returns, we do a non-human interface processing of cases, we do issue refunds without human intervention," she added.
In this regard, Kapur said arbitration is not the best way to resolve tax disputes.
"One must understand that if MAP (Mutual Agreement Procedure) works, there is no need for arbitration," she said.
"Because taxation is a sovereign right and with the two competent authorities who represent the two sovereigns cannot resolve a dispute then how would you ensure that the arbitration award will be fair," she added.
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.