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Manipal group to shut down NBFC arms -- Restructuring plans for repayment of deposits

Our Bureau

BANGALORE, April 15

THE Manipal group plans to exit non-banking finance business by shutting down its three subsidiaries — Maha Rashtra Apex Corporation Ltd (MRAC), Canara Nidhi Ltd (CNL) and Manipal Home Finance Ltd (MHFL). The group has requested the Karnataka High Court to approve its proposed restructuring plans for all the three entities, according to the Vice-Chairman, MRAC, Mr Y.V. Pai. A creditors' meet has been scheduled on June 14.

"We suffered under a negative U-turn in RBI policies towards NBFCs in 1997," Mr Pai said. The three companies currently manage public deposits of Rs 313 crore with a depositor base of 1,75,000.

For MRAC, the restructuring package proposes that interest on all deposits and bonds to be waived with effect from April 1, 2001. Deposits/bonds of Rs 5,000 and less will be repaid in full within 90 days from the `effective date' or before 31 March, 2003, whichever is later. Effective date means the date on which the order of the high court sanctioning the scheme is filed with the office of the registrar. However, deposits of Rs 5,000 and above would be returned in three parts: 20 per cent of the amount due on April 1, 2001 will be paid in four equal quarterly instalments commencing with the calendar quarter after 90 days from the effective date, 15 per cent will be compensated by issue of equity shares of group company Kurlon Ltd at a value of Rs 80 per share and the balance 65 per cent would be offset by issue of asset recovery bonds. Mattress manufacturer Kurlon will be listed on the regional stock exchanges of Bangalore and Mangalore, following the issue of equity shares. It is to be noted that both the bourses hardly report any trading, following the ban on short sales and imposition of T+3 regime. The asset recovery bonds will be issued by Maha Rashtra Asset Management Company Ltd . Any amount recovered in excess of the face value of the asset recovery bonds will be distributed as premium on redemption.

For depositors in Canara Nidhi, interest rates on all deposits will be waived with effect from April 1, 2002. Deposits ranging below Rs 5,000 will be repaid in full within 90 days from the effective date or before March 31, 2003, whichever is later. While deposits above Rs 5,000 up to Rs 10,000 will be repaid in one or more instalments after April 1, 2003 but before March 31, 2004, deposits above Rs 10,000 will be repaid in one or more instalments from April 1, 2003.

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