The Tripura government has asked four non-banking financial companies (NBFCs), including Rose Valley, not to collect deposits from the people, and to make due payments to depositors by July 31, officials said here Thursday.
"The four NBFCs, including Rose Valley, were violating the SEBI (Securities and Exchange Board of India) Act, 1992, collecting huge money from people by promising abnormally high rates of interest. Officials examined their papers and found them erroneous," Sadar Sub-divisional Magistrate Manik Lal Das told reporters.
He said: "Before passing orders not to collect deposits from people and make due payments to the depositors by July 31, we served show-cause notice to them. The replies to the show-cause notice were very unsatisfactory."
Rose Valley is one of the biggest chit fund companies in eastern India.
Das, in his six-page order, has also asked all the four NBFCs, locally called chit fund companies, not to sell, transfer or alter their movable and immovable properties.
He said the actions were taken under the Tripura Protection of Interest of Depositors (in financial establishments) Act, 2000.
The act has the provision to impose a fine of Rs.10,000 for every flawed provision and act by the NBFCs and UIBs (Unincorporated Bodies) and in addition Rs.1,000 per day for continuation from the date of default.
Police had earlier arrested at least 30 important officials of the chit fund companies this year.
India's market regulator, SEBI, had earlier banned the Kolkata-based Rose Valley and several other NBFCs from accepting deposits from the public.
Raids by police and district administration officials are being conducted at the offices of NBFCs across Tripura for the past three months. Several documents and properties have been seized.
"The raids and seizures, which were launched recently across Tripura, would continue till the illegal activities of the NBFCs are curbed," an official of Tripura's small savings and institutional finance told reporters.
The Left Front government in Tripura recently asked the Central Bureau of Investigation (CBI) to probe the illegal activities of the NBFCs and UIBs, which dupe people after accepting deposits on the promise of high returns.
After Assam, Tripura is the second state in northeast India to request a CBI probe into the unlawful activities of the NBFCs and UIBs after a major chit fund scam was unravelled in West Bengal in April.
Tripura Chief Minister Manik Sarkar had said earlier: "The Left Front government is determined to stop the illegal operation of chit funds in the state."
Sarkar added that 27 NBFCs had already shut down their offices in Tripura after collecting Rs.23.16 crore from people, and 90 such organisations are still working in the state.