700 companies under RBI lens for non-payment of investor money

The move comes against the backdrop of rising instances of people getting duped by illicit money pooling activities

More than 700 companies across the country have come under the RBI scanner for alleged non- payment of investors' money, the government said on Friday.

Further, the Reserve Bank of India (RBI) is in the process of ascertaining the number of potential Non-Banking Financial Companies (NBFCs) which are functioning without proper registration.

The move comes against the backdrop of rising instances of people getting duped by illicit money pooling activities.

"RBI has reported that there are 701 companies operating in different states/union territories which are not registered with RBI, against whom complaints regarding non-payment of investors' money have been received or noticed by RBI during the last three calendar years and till November 20 in current year," Finance Minister Arun Jaitley informed the Lok Sabha.

These companies are spread across Ahmedabad, Bengaluru, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Jaipur, Hyderabad, Kanpur, Kolkata, Mumbai, New Delhi, Patna and Thiruvananthapuram.

In December 2012, the Corporate Affairs Ministry had send a list of 34,754 companies to RBI stating that many of them might be carrying out NBFC activities without mandatory registration with the central bank.

RBI has conducted a one-time examination of financials of all these companies to check whether they were required to be registered with it. Those already registered with the apex bank were exempted.

Out of the list, 4,102 companies were registered as NBFCs while 14,323 entities were not required to be registered with RBI.

Around 5,912 companies are prima-facie carrying on business that meets the principal business criteria to be treated as NBFC and required to be registered with RBI.

However, out of them, 421 were not granted registration or their certificates of registration were cancelled.

In the written reply, Jaitley said the central bank is in the process of initiating action against erring companies for violation of the RBI Act.

Further, the minister said the central bank has taken various steps to curb activities of unauthorised entities under the RBI Act.