The State government is actively considering an amendment to Karnataka Protection of Interest of Depositors in Financial Institutions Act, 2004, to ensure firms like I Monetary Advisory (IMA) group, that used a loophole in the law to escape action, are covered by the law, said Revenue Minister R.V. Deshpande.
“We are not going to make technical excuses to desist from acting against such firms. We are now amending the law to protect the interest of investors,” he said in a statement on Monday.
Mr. Deshpande said Mohammed Mansoor Khan, the now absconding founder of IMA, had met him the previous month along with senior Congress leader Roshan Baig. But he said he did not give him any undue favours.
Sources said Mansoor Khan was trying to secure a private loan that was held up due to a pending inquiry by Revenue Department. He said the inquiry was still pending and no favour was done to Mansoor Khan.
However, despite Reserve Bank of India (RBI) flagging the firm twice earlier, the inquiry taken up by Revenue Department did not lead to any punitive action.
Explaining why there was no action against the firm before it went kaput, Mr. Deshpande, in the statement, said that the department could act against the firm only on a police report.
“The Economic Offences Wing, CID gave a report opining sections of KPID Act, 2004, cannot be applied to IMA Group,” he said.
The KPID Act, in its definition of ‘deposit’, explicitly excludes “amounts contributed as capital by partners of a firm”, [Section 2 (ii)], while IMA group collected contributions to the company through a Limited Liability Partnership (LLP).
