NBFCs with over Rs 100 crore of depositors' money will be told to transfer money to IEPF
The Ministry of Corporate Affairs (MCA) will soon send notices to the country's top non-banking finance companies (NBFCs), including Dewan Housing Finance Ltd, Shriram Transport Finance Company and Mahindra & Mahindra Financial Services Company known as Mahindra Finance, over non-transfer of fixed deposit money of small investors to the government as mandated under the law, a person privy to the development said.
"The government has decided to issue notices to leading 3-4 NBFCs... to begin with. All those having over Rs 100 crore of depositors' money accumulated over years will be told to transfer the money immediately to the Investor Education and Protection Fund (IEPF) Authority without any further delay," the official said.
As per the provisions of the Companies Act, 2013, the companies are required to transfer unclaimed and unpaid amounts, including deposits, dividends, debentures and shares, lying with them for over seven years to IEPF. Investors can claim by filing a refund /transfer form with the IEPF of the government, which acts as custodian.
- 3-4 – NBFCs likely to get notices from govt
- Rs 1,514 cr – Deposit amount recovered from Peerless Group
- 1.5 cr – Small investors invested in fixed deposit scheme of Peerless Group
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The move against the NBFCs comes in the wake of the recent recovery of deposits to the tune of Rs 1,514 crore from Peerless Group. The unclaimed amount belonged to about 1.5 crore small investors who had invested in a fixed deposit scheme of Peerless General Finance and Investment. The money was transferred by the company to the IEPF Authority after a long gap of 15 years.
Like Peerless, other NBFCs too may be sitting on hundreds of crores worth of depositors' money for more than seven years. The balance sheets of many NBFCs are showing unclaimed and unpaid amounts.
"We have gone through the balance sheets of all the big NBFCs for the past several years. It has been found that the quantum of the money accumulated with them is huge," said another official, adding that the companies were yet to transfer such amounts to IEPF even after seven years.
IEPF Authority was set up under the MCA as per the Companies Act, 2013, to focus on protecting the interest of investors and promoting education and awareness.
While reasons for non-payment of fixed deposits are not clear, it could range from long-term investment, loss of deposit certificates to delay in payment by the company, according to the officials.
To reach out to small investors, the MCA is working on an online form for depositors of NBFCs, chit funds and other entities to file claims. The ministry also plans to give advertisements in the regional newspapers to reach out to depositors.
"We will ask investors all over the country to contact us if the deposits made in a company or a chit fund have matured before January 2019, but are yet to be paid," the official said.
PEERLESS ACTION
- Like Peerless, other NBFCs too may be sitting on hundreds of crores worth of depositors' money for more than seven years
- To reach out to small investors, MCA working on an online form for depositors of NBFCs, chit funds and other entities to file claims
- Ministry also plans to give advertisements in regional newspapers to reach out to depositors
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