Kanva Groups MD held for defaulting investors

Kanva Groups MD held for defaulting investors

N Nanjundaiah chairman and managing director Kanva Group of companies

Basaveshwaranagar police on Friday arrested chairman and managing director Kanva Group of companies, N Nanjundaiah for allegedly cheating investors.

On Thursday, over 30 investors protested outside Sree Kanva Souharda Co-operative Credit Limited (SKSCCL) office in Rajajinagar, for delay in paying interest and principal for the last two months. They also lodged a complaint with the police.

"Based on complaints by 15 depositors, the police arrested Nanjundaiah. He has been remanded in judicial custody" Ramesh Banoth DCP (West) said.

The number of complaints may go up. A majority of the depositors are retired employees, according to an officer.

The SKSCCL, which began operations in 2005, has 21,682 registered members. With a turnover of Rs 550 crore, it has about 12,000 depositors. 

Based on the company's promise of 12.6 % interest annually, Gopal Byatappa (62), invested Rs 11 lakh on September 11, 2018. As the second instalment, he deposited another Rs 5.50 lakh. So far, he has received just Rs 1 lakh in return. He is yet to receive Rs 16.50 lakh and an interest of Rs 1.06 lakh. 

Nanjundaiah offered 12.60% interest annually and double the principal after five years, said the police.

Nanjundaiah invested the money in reality, textile industry and fashion retail chains. As business collapsed, he shut down the textile factories, while the number of fashion retail stores dipped to 15 from 125. 

Nanjundaiah reportedly claimed that his firm's turnover was over Rs 1,000 crore and he had lent Rs 600 crore as loans. Situation went out of control as depositors began withdrawing principal amount before maturity period.

'Will sell properties to pay back investors'

Borrowers have become defaulters and this has triggered problems. The company will sell properties and complete depositors' settlements," R Mohan, legal consultant for Kanva, told DH.

According to him, rumours were spread about the company after the multicrore I Monetary Advisory (IMA) scam. The SKSCCL is returning deposits.

Harish, one of the director of Kanva, said that the company incurred losses for the last three years.

"The company needs to recover loans from borrowers. We have investments to return to all our investors," he said. As many as 11,000 members have defaulted on their loans. The company has returned Rs 297 crore to depositors.