What’s happening to our country, every day is bringing in its wake some finance scandal or the other and here comes another and that too involving the august name of the reputed TATAS.

The news pouring in says that Reserve Bank of India’s (RBI) top brass on non-banking finance company supervision met on Wednesday to discuss the goings on in Tata Finance and the recent developments at Tata Finance will also affect all ambitions that the Tata group harbours of getting a banking licence and the RBI sources have confirmed this.

Blame game begins > TFL blames Pendse

ON 25/7/2001, Tata Finance (TFL) revealed that it gave the boot to five executives, after it recently discovered certain unauthorised financial transactions undertaken by the then management of the company led by managing director, Dilip Pendse, Mr Pendse was in-charge of the day-to-day operations from June 1, 1996 to May 31, 2001.

TFL said it was also contemplating legal action against the erring executives based on the legal advise it has been given and the company has been advised that there was a prima facie case of criminal breach of trust, falsification of accounts and cheating which were punishable under the Indian Penal Code (IPC). The unauthorised transactions include, inter alia, diversion of funds to TFL’s subsidiary, Niskalp

The statement also revealed that Investment and Trading Co and certain other associate companies, whose affairs were also controlled and managed by the then TFL management, the group said the TFL board, backed by the promoter group will ensure that TFL meets its financial obligations to its lenders and depositors.

Niskalp and the associate companies deployed a substantial part of these funds in trading/speculative activities in certain specific scrips in the stock market and these activities have led to sizeable losses in Niskalp and other associate companies. A preliminary enquiry by an auditor revealed several operational lapses and irregularities that have been committed by the erstwhile TFL management team and in compliance of its reporting requirements to regulatory authorities, including possible mis-declarations in the TFL offer document for issue of preference shares in March 2001. Niskalp has ceased to be a TFL subsidiary from June 28, 2001.

Meanwhile, while the Tata group said that it had sacked five officials of Tata Finance, their names could not be ascertained, it has been learnt that these officials are executive vice-president & corporate finance CEO, Milind S Desai; executive director for corporate affairs and company secretary Baroz Guzder; vice-president for investments AL Shilotri; and senior vice-president for treasury, A Gaitonde.

The chief general manager-acting for non-banking finance company supervision, LM Fonseca, had discussions with RBI deputy governor, GP Muniappan, discussing the developments at Tata Finance and RBI sources said that adverse developments in a public deposit taking non-banking finance company is a matter of concern and our annual inspections were on course, but Tata Finance will get a closer look now.

I do not know whether a formal decision has been taken on the matter. But yes, the RBI will have to take a look the finance company. For the Tata group, the recent developments at the finance company will also affect its publicly stated ambitions of securing a banking license and in the immediate aftermath of the CRB scandal in 1996, the central bank had, in a knee-jerk reaction, also withdrawn the banking license extended to Cox & Kings, which is viewed by many as being part of the Tata group.

Sources pointed out that given the "public" nature of Tata Finance operations, of particular concern is the fact that it is restructuring its 100 per cent arm, Nishkalp Investment Trading Co with Tata Sons picking up 50 per cent by way of a preferential allotment of shares.

YET ANOTHER SCANDAL POSSESSING EVERY INGREDIENT OF A MASALA SOUP WHICH MAKES FOR A SUSPENSEFUL VEIWING, IS IN THE OFFING AND those having a stake in the same should get their purse strings with the company examined and verified and also keep an eye on the developments. GOD help INDIA the way every day some scandal or the other seems to be hitting the bull’s eye and pray when will the regularity of the finance scams of the nation in every way will come to an end.