Even as the Department of Company Affairs (DCA) has set up a separate investor protection fund under Section 205 C of the Companies Act, investor representatives have now turned their attention to other sources of investors’ funds languishing with intermediaries, which should be used for investors’ benefit. BJP MP Kirit Somaiya says that Indian mutual funds hold well over Rs 1,000 crore in the form of unclaimed dividends. He estimates that Unit Trust of India alone has over Rs 800 crore of unclaimed dividends while SBI Mutual Fund and LIC Mutual Fund have Rs 100 crore each. Add to this the money available with other funds and you have a neat little nest egg that actually belongs to investors. With Sebi, the DCA, stock exchanges earmarking separate funds for investor education programmes, we don’t need more money for this purpose. Hopefully, the government will realise that what Indian investors need far more urgently by way of investor protection is a mechanism for quick redressal of their grievances—preferably through special courts or tribunals to handle investment related disputes only. With a kitty of over Rs 1,000 crore comprising investors’ own funds, the government should be able to justify setting up well financed and equipped tribunals across the country to resolve investor complaints. Quick dispute resolution will bring investors back to the market. If these specialised tribunals also hand out exemplary punishments, it will also improve governance standards among market intermediaries.
Why OCB’s get away
Data submitted by RBI shows that there are over 664 OCB’s registered with it who have invested in India. The list reveals that scores of them are registered by merely giving post box numbers in Mauritius and Dubai as addresses. Over 50 to 60 OCB’s operating through different banks are listed at a single address in Mauritius, yet the countries of their incorporation are different. Another 30 OCBs all ending with the word corporation are listed at a single address. Although the RBI lists the place of incorporation, it gives no details about ownership and in most cases, their capital ranges from $10 to a few hundred. A simple perusal of the list shows that the OCB route was bound to be misused if the disclosure requirements from them were so scanty. Yet, neither politicians nor policy makers want OCBs banned and or the investment route shut down.
The custodian gets cracking
D.K.Tyagi, the Custodian appointed under the Special Courts Act after the 1992 scam, has galvanised his office into action. Having slumbered for a decade, the Custodian is now attempting to sell scam-related assets. Last week it advertised for the sale of Ranbaxy shares owned by the late Harshad Mehta—main accused of 1992. A few weeks earlier, another advertisement sought to sell properties belonging to the Bhupen Dalal group in connection with the money that it owed to industrialist T.B. Ruia of Killick Nixon. That action followed a consent decree filed by both parties in 1995, whereby T.B. Ruia admitted to receiving over Rs 18 crore from the Bhupen Dalal Group, who in turn agreed to pay the custodian. This money was allegedly siphoned off from banks and financial institutions and is only part of the Rs 64 crore (before interest and Rs 100 crore including interest) liability admitted by T.B. Ruia. In these 10 years, the custodian had failed to prevent Ruia from alienating the property or pledging it with GTB and Vysya Bank against fresh borrowings.
Remembering consumer rights
With the nation all tensed up over the drama at Ayodhya, it is hardly a surprise that people forgot the day that recognises their march towards empowerment. March 15 was World Consumer Rights Day—but Indian consumers who are still a long way from being king, missed its significance. Consumers International, a worldwide federation of consumer organisations has decided that this year’s theme will be ‘Consumer Right to Representation’. The message is simple: people should have a say in the decision-making process that affects their access to basic needs and their quality of life. But Justice Mahendrabhai S. Parikh, President of the Consumer Disputes Redressal Commission of Gujarat says the hurdle to implementation of consumer welfare schemes is bureaucratic delays and red tape. In effect, consumer representation or empowerment cannot begin unless government becomes efficient.
Tailpiece: Nothing could be more shameful to us than the suspension of SMS services by cellular operators on March 15 as a preventive measure. The legacy of the Gujarat riots is that we have lost the right to be treated differently from rioters. After all, it is people like us who used the SMS as a tool, to direct friends, zipping around in fancy cars towards new opportunities for loot and plunder.