The Reserve Bank of India (RBI) on Monday cautioned Kerala-based gold-loan company Manappuram Finance Ltd against accepting deposits from the public and threatened to take action if it continued doing so.
RBI said acceptance of deposits either by Manappuram Finance or Manappuram Agro Farms (Magro) is “punishable with imprisonment” and they do so “at their own risk”.
The central bank had earlier banned the company from accepting public deposits and it became a non-deposit taking non-banking finance company (NBFC) from 22 March 2011.
However, “it has come to the notice of the Reserve Bank that Manappuram Finance has been accepting deposits from the public in its branches and offices (have) been issuing deposit receipts in the name of Magro…” RBI said in a notification on its website.
“It is further observed that in some cases instead of repaying the matured deposits, fixed-deposit receipts are being issued in the name of Magro. In terms of Section 45-S of the RBI Act, acceptance of deposits from the public by Magro, which is an unincorporated body, is also prohibited,” it added.
Managing director of Manappuram Finance, I. Unnikrishnan, said the company has not been accepting deposits since March 2011 and a technical glitch in its accounts had led RBI to issue the notification.
“When we became a non-deposit taking NBFC, there was a balance of Rs. 1.23 crore in our books as public deposits. Out of this, due to some technical problems, Rs. 32,00,000 could have continued as deposits with us… we are trying to rectify it,” Unnikrishnan said over the phone.
