Born
in a jute trader's house in Calcutta, Chain Roop Bhansali was a studious
person. After obtaining a degree in commerce, Bhansali completed Chartered Accountancy
in 1980. In the same year, he started a financial consultancy firm, CRB
Consultancy in Calcutta. Over the years, Bhansali acquired other degrees viz.,
ACS, Ph.D., MIIA (US) and a diploma in Journalism. Though he made a lot of
money, Bhansali found it difficult to find recognition in Calcutta.
He
then moved to New Delhi to join one of the country's leading registrars of
companies. However when Bhansali was caught short charging the registrar's
clients, he had to leave and he then started his journey towards his Dooms Day.
The Top 3 Finance Companies
Bhansali established 'CRB
Consultants,' a private limited company in New Delhi in 1987. In 1992, the name
of the company was changed to ‘CRB Corporation’ and it was converted into a
public limited company. The company offered various services including merchant
banking, leasing and hire purchase, bill discounting and corporate funds management,
fixed deposit and resources mobilization, mutual funds and asset management,
international finance and forex operations. CRB Corporation LTD was also very
active in stock-broking having a card both on the BSE and the NSE.
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
started his run by 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, 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.
Forget
investors, who were blinded by the upfront cash incentives of 7-10% which
attracted them in hordes, but 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.
Post-1995,
he got a beating on the stock markets. His investments in the property market
did not pay off because of the slump. In the same year, CRB Capital Markets
opened a current account in SBI's main Mumbai branch, for payment of interest,
dividend and redemption cheques. The
payment warrants could be presented at any of the 4,000 SBI branches for
payment. However, Bhansali was granted only a current account facility and did not
enjoy any overdraft facility. He was expected to deposit cash upfront into the
current account, along with a list of payments that had to be honored. Clamming
that the logistics of payment were very complex and that it was not possible
for every branch to check with the head office before honoring a dividend
warrant, the branches gradually began treating these instruments just like a
demand draft. For about nine months, the setup worked very well.
However,
in March 1996, SBI realized that the account had been overdrawn to the extent
of a few crores. Bhansali was called to the SBI office and asked to remit the
difference immediately, which he promptly did by borrowing money from his
depositors.
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. 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.
Dr.C
R Bhansali’s 'Dream Run' came to an END.
The Aftermath
May
18, 1997 –an angry, frustrated and scared mob stood outside the Reserve Bank of
India's (RBI) Mumbai headquarters under the scorching sun. They lingered over
the arrival of Chain Roop Bhansali, the head of the CRB Group of companies.
Most
top officials of CRB were untraceable from the first week of May itself. The
Central Bureau of Investigation (CBI) locked and sealed the offices of the CRB Group
and arrested six persons. The CBI also conducted simultaneous searches at 16 places
in Mumbai, three in New Delhi, and two places each in Calcutta, Jhunjunu,
Sujangarh and Bikaner for Bhansali and his associates. But the rumors were that
Bhansali had fled India and was hiding in Hong Kong or Canada.
The
CBI froze the bank accounts of CRB group of companies and seized incriminating
files and other documents from the residence of the vice-president.
RBI
filed a winding-up petition claiming that the continuance of the CRB Group was
not in the interest of the public and the depositors and Bhansali was given 72 hours
of time to come up with a plan to repay all his liabilities. The order prohibited
CRB from selling, transferring, mortgaging or dealing in any manner with its
assets and from accepting public deposits.
With
the expiry of the RBI deadline, the CRB Group collapsed, shattering the dreams
of thousands of investors across the country
Bhansali surrendered
on June 9, 1997 and spent three months in jail. He is out now but nobody knows
where he lives and if they do, they are not snitching. But in 2001 an anonymous
letter was received by RBI which is believed to be written by Bhansali, and it proposed
the revival of CRB Group so the investors could
be repaid.
Source- Internet
