Microfinance violated RBI Guidelines to Run Ponzi Firm, claims CBI

Bhubaneswar, Dec 16: The CBI, which is investing the chit fund scam case in Odisha, said that the Mircofinance Limited had violated the guidelines set by the Reserve Bank of India (RBI) in obtaining a licence to run the ponzi sheme business in Odisha.

The CBI claimed that the chit fund company had violated the terms and conditions under which it was granted a certificate of registration under the "A" category on January 21, 2001, which allowed it to accept public deposits as a non banking financial company (NBFC). The RBI had downgraded its registration to the "B" category on September 18, 2012, allowing the company to provide loans to public, but it was barred from collecting deposits.

However, the company did not obey the restrictions imposed on it and continued collecting the deposits from the public. At least 12 cases were filed against the Microfinance Limited towards the end of December 2012 following which the state crime branch conducted raids at its branches across Odisha. Later, the firm changed the name to Micro Leasing Funding Private Limited (MLFPL) and continued collecting money from the depositors.

The Microfinnace also expanded its business in the name of several sister agencies like Micro Roadways, Micro Constructions, Micro Ispat, hotels, Micro television,  Micro Media and Entertainment and education.

The directors of the company had approached the state government departments like MSME, Finance and Panchayati Raj seeking approval to do business without any hindrance. But the government rejected the approval on July 2013. This happened when Durga Prasad Mishra, who was arrested in connection with the Odisha chit fund scam, was the director of the Microfinnace Limited. He handed over the MD post to Ashok Pattnaik in December 2013 following the disapproval of the government.

The government had ordered the Economic Offence Wing (EOW) of the State crime branch to probe the case after RBI informed about the illegal transactions by the company. During the probe, the crime branch had arrested Ashok Pattnaik on June 4 on charges of duping depositors, another director Baikuntha Patnaik and Ajay Swain personal assistant (PA) to the commissioner-cum-secretary, Panchayati Raj on the charge of money laundering and issuing official letters without due permission.

Ajay Swain had allegedly issued a letter to all district collectors not to take action against the Microfinance Ltd, and allow it to continue its business since it had got prior permission from the state government.

However, Mishra refuted the allegations, and claimed that his company was running its operations as per the RBI guidelines and he was about to return the money to the depositors when the crime branch intervened into the matter.

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