IMA: Karnataka Govt ignored RBI over technicality

The state government did not act against the scam-hit I Monetary Advisory (IMA) citing technical grounds despite a push from the Reserve Bank of India (RBI) for a closer look into the company’s activities, it has now come to light.

This was revealed on Monday when Revenue Minister R V Deshpande said a public notice issued by the government in November 2018, inviting complaints on suspicious ponzi schemes, received no feedback from citizens.

“On April 2, 2019, the RBI pointed out that a previous inquiry that was done was only based on a complaint that was received, but it did not look into the company’s modus operandi,” Deshpande said.

However, Deshpande said the police found that the IMA case would not attract provisions under the Karnataka Protection of Interest of Depositors (KPID) in Financial Establishments Act, 2004 as the investors were made shareholders. “We can’t take action till we get a report from the police,” the minister said.

Under the KPID Act, the government can attach properties of a fraudulent company. An officer not below the rank of an assistant commissioner is appointed to oversee the attachment. “We had given general powers to all assistant commissioners. But in a meeting on February 1, 2019, the RBI said we can’t do that, and only jurisdictional officers should be empowered on a case-to-case basis,” he said.

In another revelation, Deshpande said Shivajinagar legislator R Roshan Baig visited him about a month ago along with fugitive IMA founder Mohammed Mansoor Khan.

This assumes significance amid reports that Khan was lobbying with his political connections to get a Rs 600-crore bailout, for which he needed a no-objection certificate (NOC) from the Revenue department.

“It is true Baig came to me with Khan. Baig said Khan was from his constituency, that he ran a charitable school, jewellery and gold business, and that he was a good man. I was told the company was yet to get relief despite having gone through inquiries as per RBI direction. I said I wasn’t aware if the RBI inquiry was done. I can’t do anything without the inquiry report, I said, and that whatever action we take will be as per law,” Deshpande said.