The Man and his Karma

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.

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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