Ceat Fin loses dealership licence
By Uday Chatterjee | 19 Sep 2001
Mumbai: The RBI has debarred Ceat Financial Services Ltd (CSFL), the financial services arm of the RP Goenka Group, from being a primary dealer in government securities. There are 16 primary dealers in the Indian securities market and CFSL is the first of such to lose its licence.
The RBIs decision to debar CSFL from dealing in securities was due to the companys poor performance, it is learnt CSFL has accumulated losses totaling Rs 139.35 crore. It had stopped its hire purchase and leasing operations and has been defaulting in payment of interest and principal to its depositors.
CSFL has a total deposit liability of about Rs 120 crore down from over Rs 250 crore about two years ago. It had sought the Company Law Boards permission to stagger the payment of interest and deposit, but had failed to meet its commitments.
The RBI had categorically told CESL to bring in an additional capital of Rs 50 crore the minimum capital required to set up a primary dealership operation and to hive of this division into a separate entity. This, however, was not done.
The RBI on 19 September issued a statement saying: "The RBI has decided not to renew its authorisation to Ceat Financial Services for the primary dealer business." No reasons for the non-renewal were given.
CSFL is controlled by the well-known RP Goenka Group, which has interests ranging from tyres, tea, music, power generation and music. The ban can hit the image of the group to some degree.
