Don't invest with unregistered NBFCs, Punjab issues advisory

CHANDIGARH: To safeguard people from illegal money-pooling schemes, Punjab government has issued a public advisory cautioning people against investing with unregistered Non Banking Finance Companies (NBFCs).

The advisory has been issued after the state government noticed that most of the frivolous NBFCs amass public money by resorting to fraudulent tactics, a spokesman for the state finance department said.

Only authorised NBFCs can collect money from the public and for this they need to register with the RBI, he added.

As per RBI, the maximum rate of interest an NBFC can at present offer is 12.5 per cent. The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months.

Respective Additional Deputy Commissioners (Development), who hold the charge of joint director, institutional finance have been sensitized to keep a close tab on the working of NBFCs in their respective areas, he said.

Recently, a meeting was held in Mumbai between top officials of RBI and Sebi with representatives of various states to discuss the growing menace of illegal money-pooling schemes. The states have been asked to act as the first line of defence against such fraudulent activities.