The Reserve Bank of India (RBI) on Monday rapped Kerala-based Manappuram Finance for accepting deposits even after the firm converted itself into a non-deposit taking non-banking financial company, adding the company was not permitted to do so.
"The Reserve Bank advised that Manappuram Finance Limited, Thrissur, Kerala (earlier known as Manappuram General Finance and Leasing Ltd), is not permitted under the Reserve Bank of India Act, 1934, to accept/renew deposits from the public," the central bank said in a statement.
It added that acceptance of deposits either by Manappuram Finance or by by group company Manappuram Agro Farms (MAGRO) is punishable with imprisonment.
The statement also "cautioned members of public that those who deposit money with Manappuram Finance Ltd or MAGRO do so at their own risk".
Manappuram Finance was earlier registered with RBI as a deposit taking Non-Banking Financial Company. However, in March 2011 it became a non-deposit taking non-banking financial company.
"It has come to the notice of RBI that Manappuram Finance has been accepting deposits from the public in its branches and offices and issuing deposit receipts in the name of Manappuram Agro Farms (MAGRO), a sole proprietary concern of Shri V P Nandakumar who is the Executive Chairman of the company," the central bank said.
It added 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," the RBI said.
- With PTI inputs