The Reserve Bank of India on Wednesday stated it has cancelled the certificate of registration issued to Mumbai-based, erstwhile Tata Finance subsidiary, Niskalp Investments and Trading Company Ltd, for carrying on the business of a non-banking financial institution on April 28, 2005.
Niskalp Investments was left out of the merger process when Tata Finance, its former promoter, was merged into Tata Motors in early 2005 thereby leaving the NBFC in a financial mess.
Under powers conferred by Section 45IA of the Reserve Bank of India Act, 1934, the Reserve Bank can cancel the registration certificate of non-banking financial company.
In August 2001, the Securities and Exchange Board of India had suspected insider trading in Niskalp by chairman J E Talaulicar by selling his personal shares in the erstwhile, Tata Finance. Niskalp was then a subsidiary of Tata Finance Ltd. Niskalp ceased to be the subsidiary of Tata Finance on June 30, 2001.
Sebi had suspected that Talaulicar had used inside information - in his capacity as chairman of Niskalp - to press sales of his own holdings in Tata Finance, with the full knowledge that Tata Finance would take a beating in the markets once the information of Niskalp's losses became public.
In the wake of the allegations, Talaulicar resigned from the board of Niskalp and Tata Finance seeking impartial investigations to clear his name.
Alongside, the Reserve Bank of India had also conducted an enquiry on Niskalp after Tata Finance condonation for the Niskalp as it had submitted fudged accounts and balance sheet for the year ended March 2001.In January 2005, Tata Finance held 50 per cent in Niskalp, Tata Sons 49 per cent and the rest was held by Telco dealers.
At one point in time Tata Finance held as much as 99.4 per cent which was reduced following the Tata Finance fiasco coming into public scrutiny. Tata Sons was expected to increase its stake in Niskalp.
Apart from the NBFC business, Niskalp owns a 21.5 MW windmill power project.
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