J&K To Have a New Law to Punish Fraud NBFCs

KL Desk

SRINAGAR

To protect the interest of individuals who will deposit their money with the non banking financial companies (NBFC), J&K government today introduced a bill in the state assembly. Explaining objective of the bill, Finance minister Abdul Rahim Rather said “a large number of unknown/unauthorized financial establishments started their business in the State in recent years and closed their activities soon thereafter, duping the gullible public of hard earned saving worth tens of corers of rupees.”

“Most of these establishments turned out to be bogus and their sole aim was to loot the general public,” he added.
The modus operandi employed by these establishments was to offer fanciful returns on deposits and commercially impossible low interest rates on loans for which they would charge handsome service charges in advance.
The NBFC are being regulated by the Reserve Bank of India but the state government feels the laws are inadequate in managing the interests of the individuals who are cheated by frauds in the guise of NBFCs.

The legislation as per Rather is aimed to curb the unscrupulous activities of such financial institutions in the State of Jammu and Kashmir and to protect the interests of the Public at Large by  prescribing stringent punishment for such wrong doings, besides providing for the attachment of their properties etc.

“The promoters of these bogus financial establishments fled from the state, leaving thousands of innocent citizens in a quandary, not to speak of getting returns as promised, these firms defaulted even in the return of the principal sums of the depositors and advance service charges taken from the loaners. “This state of affairs has necessitated taking appropriate measures,” said the minister of finance.

Another bill was today moved by education minister Abdul Gani Malik. The bill is aimed to amend the state Employees Provident Funds (and Miscellaneous Provisions) Act, 1961.

Malik talking about the bill said, “the law is applicable to every establishment in which five or more persons are employed at any time.”
With a view to reconciling the conflicting interests of Labor and Industry, a High Level Committee was constituted vide Government Order No.1255-GAD of 2011 dated 24-10-2011 to discuss the issues of Federation of Industries with regard to increasing the threshold limit of the applicability the said Act from 5 to 10 workers

The constituted committee held several meetings with various stakeholders and in its recommendations mentioned that the threshold limit of number of employees in an establishment for coverage under the EPF Scheme will be raised from 5 to 10 prospectively, provided that the establishments covered at present, and having employees lesser than ten, will continue to be within the ambit of the scheme in respect of the employees already covered. Besides the committee also recommended that the rate of contribution of the employer’s will be increased from 8.33 to 12%”.

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