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Money > Business Headlines > Report September 1, 2001 |
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Tata Finance Rumpus: Arms directors stare at penaltyTamal Bandyopadhyay The directors of two Tata Finance outfits -- Inshaallah and India Emerging -- could face prosecution and imprisonment of at least one year and a penalty of Rs 100,000 for running a non-banking finance company without registration from the Reserve Bank of India. Under the Section 58(b) sub-Section 4(a) of the RBI Act, 1934, directors of unregistered NBFCs could face prosecution and imprisonment for up to five years and a penalty of Rs 500,000, legal sources said. The minimum punishment laid down by the sections is one-year imprisonment and a Rs 100,000 penalty. Malini Sanghvi and Ajit Singhvi, the two directors of India Emerging, resigned from the company's board in mid-August after the Tatas filed a first information report against the former managing director of Tata Finance, Dilip S Pendse, and five other executives. More recently, Shekhar Deshpande, company secretary of Tata TD Waterhouse, a Tata Finance subsidiary, was inducted into the board. The offer letter of the Tata Finance rights issue did not make any mention about these two unregistered NBFCs, run by Niskalp, in violation of the norms stipulated by Securities and Exchange Board of India. In effect, by keeping them operational and not acknowledging their existence in public, Tata Finance violated the norms of both the regulators -- the RBI and the Sebi. While Inshaallah's application for registration was rejected by the RBI in 2000, it is not known whether India Emerging applied for RBI registration at all. Inshaalah Investments, which hold 22,67,400 shares of Tata Finance, is the third largest stake holder in the company, while India Emerging is the sixth largest share holder in Tata Finance with 14,52,219 shares. YOU MAY ALSO WANT TO READ:
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