NRB mum over illegal ads
KATHMANDU,JAN 1:
Regulators are unable to send the message that publicly offering lucrative returns on investment or deposits by non licensed entities is illegal.
Recently, there was a classified advertisement in a national daily looking for a partner and investor for its venture offering eight per cent interest on the investment. The advertisement also claimed that the investment will be returned within eight months.
“Publicly offering interest on investment or deposits to attract fund by non-licensed entities is not legal, be it knowingly or unknowingly,” said spokesperson of Nepal Rastra Bank (NRB) Bhaskar Mani Gyanwali.
Only commercial banks, development banks, finance companies, microfinance institutions and co-operatives licensed by the central bank or Department of Cooperatives are allowed to collect deposits and pay the interests. Similarly, only public limited companies are allowed to issue shares to public that also after obtaining permission from Securities Board of Nepal (Sebon).
“We have business plan and desire to work but do not have any collateral to offer to banks,” informed one of the promoters of the company looking for a venture capitalist to invest in their idea.
The advertisement was by a fund raising venture Green World Connections that is offering to globally market Nepali garments, medicinal herbs, offer traveling and volunteering opportunities in Nepal. The company’s website claim that all profits generated will be used in funding charity organisation called Charity Factor Nepal — a Nepal chapter of international humanitarian organisation — Charity Factor Foundation.
“Advertising is the easiest way to approach the interested parties eliminating the involvement of middlemen, the prospective investor will only put their money if they trust us and our business plan,” explained the advertiser without wanting to be named.
Likewise last year, Rajdhani Investment Fund was involved in running mutual fund like scheme without taking the permission from Sebon. The fund was collecting money at the interest rate of 10 per cent from public to invest in shares calling it mutual funds. Capital market regulator later asked the fund to shut down the operation but did not press any charges.
Earlier in September, NRB banned the advertisements offering to provide bank balance certificates for a fee. The central bank also asked the banks and financial institutions to stop the issuance of bank balance certificates to non account holders. The newspapers’ classifieds used to be strewn with the advertisements offering to provide bank balance certificates at certain charge. Offering to make certificates for bank balance was illegal yet but it was happening openly.
The move came in a bid to rein in the possibility of general public being cheated by some unscrupulous person or institutions. Few cases of people being ripped off following the fake bank balance certificates have also been reported.
The biggest slip of regulators’ incapability of taking action in time of such flouting of regulations is the case of Unity Life. The unability of the central bank and Insurance Board in curbing their network marketing activities on time has resulted in loss of millions of rupee. They were providing insurance services without taking permission from regulator.
Source: THT
