MUMBAI: C
R Bhansali’s web of deceit was elaborate. He had floated 133
companies to pull in funds and suck them out. Money came easy; he was
inspiring with his grandiose plans, high interest rates and entry into
mutual fund and banking. CRB’s meteoric rise in the early 90s
coincided with the boom in the Non-Banking Finance Company (NBFC)
sector. His fall in 1996 was equally fast.
Forget investors, even credit-rating agencies didn’t see it
coming. CARE, a leading agency, gave ‘AAA’ rating at a time when
the company was going down.
How to become chairman of top 3 finance companies
Born in Rajasthan, raised in Kolkata, Bhansali became a dada in the
financial capital — Mumbai — before he turned 40.
First came the finance company (CRB Capital Markets), after which
the mutual fund (CRB Mutual Fund) and CRB Share Custodial Services
followed. Then he planned to get into banking, and he almost made it.
He had a dream run from 1992 to 1996 collecting money from the
public through fixed deposits, bonds and debentures. He floated around
133 subsidiaries and unlisted companies. Most of the money was
transferred to these dummy companies.
The flagship company, CRB Capital Markets, went public in 1992 and
raised a record Rs 176 crore in three years. In 1994 CRB Mutual Funds,
through its Arihant Mangal Growth Scheme, raised Rs 230 crore. Another
Rs 180 crore came through fixed deposits.
CRB Corporation Ltd raised Rs 84 core through three public issues
between May 1993 and December 1995. CRB Share Custodial Services
raised a further Rs 100 crore in January 1995 to set up operations.
Between 1992 and 1995, when the market was in the post-Harshad
Mehta bear phase, Bhansali managed to raise close to Rs 900 crore.
Post-1995, he got a beating on the stock markets. His investments
in the property market did not pay off because of the slump.
Caught in a financial trap, Bhansali tried borrowing more money
from the market. ‘‘To repay the interest rate on amounts he
borrowed later, Bhansali was forced to borrow once again. This went on
and on, and he got stuck in a financial quicksand,’’ says a former
employee, refusing to be named.
Going down, he even tried to invest in Bollywood
Bhansali made a determined effort to get out of the trap by
investing in some high-risk ventures. He is believed to have even made
a Hindi commercial film. Again, the gamble failed.
In the end, Bhansali was borrowing funds from banks through
questionable means. All was well till December 1996. Then the Reserve
Bank of India (RBI) refused banking status to CRB and contemplated
action for various irregularities.
Pradip Bhavnani, President of National Association of Small
Investors, says: ‘‘There was a lot of confusion about how to act
against CRB, considering its NBFC status. When he started defaulting,
public sector banks like the State Bank of India were the first to be
hit. Had the SEBI and RBI acted fast, investors wouldn’t have lost
money.’’
Bhansali spent three months in jail in 1997. He is out now but
nobody knows where he lives and if they do, they are not snitching.
