The C R Bhansali Scam

 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.

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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 an 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.

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 speaking.

(Courtesy: IndiaForensic.com)