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Goa tables bill to protect small investors from fraudulent finance companies

Sandesh Prabhudesai in Panaji

The Congress government in Goa has introduced a comprehensive bill in the ongoing assembly session to protect the interests of depositors investing with non-banking financial companies.

Successive governments have dithered over the introduction of the bill for 18 months.

The bill is on the lines of legislation enacted in Tamil Nadu.

Thousands of Goans, mostly Gulf-based Non Resident Indians, have been duped to the tune of Rs 500 million by 20 NBFCs in the last three years. More cases have come to light. The official police figures, however, indicate that Rs 122.2 million has been embezzled by 19 companies.

The most infamous among it is the case of the Western India Financial Services Limited in which several prominent people had invested ostensibly because it was headed by Union environment minister Suresh Prabhu, a banker-turned-politician belonging to the Shiv Sena. His name was recently cleared by a district court. Other directors of WIFSL have been reported as absconding.

Now the plan is to get the legislation passed as soon as possible in order to provide relief to those who have invested their life-time earnings in these NBFCs.

The Goa Protection of Interests of Depositors (in Financial Establishments) Bill provides for stiff penal provisions like a fine upto Rs 100,000 and imprisonment till ten years to every responsible person of the financial establishment. It also provides for attachment of property and setting up of special courts to deal with such cases.

"There has been widespread public concern about the operation of such bodies which amass substantial deposits from the gullible public and then close down operations putting depositors to a loss," observes Chief Minister Luizinho Faleiro.

Several NBFCs have mushroomed in Goa, targeting the Gulf-based NRIs who, lured in by offers of very high interest rates, invest millions. They follow a similar modus operandi: they open posh offices, appoint Goans as managers and commission agents to gain investors' confidence, and then do the vanishing act.

Rockland Leasing & Plantations Company is heading the list of "fraudulent companies". It is accused of defrauding investors of Rs 170 million. Next in the list are J V J Finance (Rs 60 million) and Calcutta-based Janapriya (Rs 18 million).

Surprisingly, the three companies do not figure in the police list. Topping the police list is United Development Finance Corporation with Rs 34.1 million, followed by Dealwell Finance, Middlemen Investments, Skyline Aquatech Exports and WIFSL, against which complaints have been received officially for duping the investors of Rs 10 million each.

Others include the Tamil Nadu-based Sarvana Credit and Investments Ltd, Speer Finance, Woodstick & Woodstick, Welfare Savings, Prudential Capital Markets, Deeplaxmi Green Plantations, Helios Finance, Anubhav Plantations, Aneja Financial Services and Gripwell Club.

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