CASE STUDY ON: CRB SCAM Every single drop of myblood is for thedepositors.

-Chain Roop Bhansali in 1997 The case is intended to give a detailed insight into the frauds committed by the CRB group of companies. The case examines how the CRB group was able to defraud the investors and the regulatory authorities with ease. The role of RBI and SBI is also explored. CRB consultants-New Delhi 1985. CRB Capital Markets (a public ltd co.)-1992 The company offered various schemes like 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 caps was also very active in stock-broking having a card both on the BSE and the NSE. The company raised over Rs.176 crore from the public by January 1995. A+ rating given by CARE and upfront cash incentives of 710% attracted investors in hordes to Bhansalis schemes. CRB Corporation Ltd raised another Rs.84crores through three public issues between May 1993 and December 1995. CRB share custodial services raisedanother Rs.100 crores in January 1995. In August 1994 , Bhansali launched CRB mutual funds (CRBMF) which raisedRs.230 crores from the market through Arihant Mangal Growth Scheme.

 Media analysts pointed out that the groups global outlook and timely foreign collaborations were responsible for its success. CRBs joint ventures with Daewoo Securities and Keystone Group met with reasonable success. In mid 1990s , Bhansali came out with the book extolling his virtues and achievements titledDr. C R BhansaliMaking the Difference. 1. What is the main issue being discuss in the case? Suspicions arose when CRB caps net worth grew from Rs.2 crores in 1992 to Es.430crores in 1996. It was in mid 1996 that reports regarding frauds being committed by the RBI group began appearing in the media. An FIR was filed against CRB as per section120B read with section 420 of the Indian Penal Code and section 13(2) read with section 13(1)D of the corruption Act. Bhansali Was Charged With Fraud, Cheating , And Siphoning Off Of Funds From SBI The modus they operated Dummy Companies. Rigging Share prices through own money. CRB Share Custodian invested Rs.15 Crores in CRB Mutual Funds. The latter held 24 lakh shares of CRB Corporation which again had aRs.16 crores investment in CRB capital markets. As a result CRB caps reported that the market value of its investments rose fromRs.76 crores to Rs.109 crores in 1995-96.

CRB corporations income more than doubled between 19941996. The Financial Wizardy was madepossible with the help of Bhansalistrusted firms of auditors D P Bhaiya & coand Jain & Swaika-both old friends from Calcutta. 2. How is this issue being addressed? In May96 current account opened in SBIs Mumbai branch Only current account facility granted No overdraft allowed Dividend warrants treated as demand drafts For about nine months all went well However in March97 SBI discovered the fraud. Bhansali was investigated immediately SBI accused Bhansali of printing 1800 fake dividend warrants. Bhansali used fake accounts in Chennai, Calcutta and Rajasthan to withdraw these dividends. CRB Caps had an outstanding liability on 50crores. Actions taken by SBI SBI officials met with Bhansali in April 1997 SBI demanded immediate repayment of the over drafted amount All property to be submitted as collateral security The systematic rot Lack of communication between the banks, RBI and the government officials Blame game between RBI and SEBI

 RBI claimed that it had no power to examine the asset quality In Dec94 SEBI conducted a routine investigation Chitale Report presented in Jan95 9 months ban on CRBMF Oct96 TFCI lodged complaint against CRB Caps In Nov96 first interim show-cause notice issued by RBI 2 months inspection took place In Feb97 final show-cause notice issued April97 ban on CRB on collection of further funds.