Manappuram Finance said on Monday that it has not accepted any deposits from the public since March last year and it will take necessary measures to address concerns raised by the Reserve Bank in this regard.
In a statement issued here, the Non Banking Finance Company (NBFC) said its board of directors met on February 10 and decided to take steps to completely "ring fence" its operations from the operations of other entities controlled by the company's Executive Chairman V P Nandakumar and members of his family.
"The board noted that the company has not accepted any deposits from the public since March 22, 2011, in compliance with its status as a non-deposit accepting NBFC. The board directed the company to take all necessary measures to fully address the concerns raised by the RBI," the statement said.
It further added: "The company will take immediate steps to completely ring fence its operations from the operations of other entities owned or controlled by V P Nandakumar and his family to ensure that there is no overlapping of assets, branches or personnel between the companies."
The RBI had last week cautioned Manappuram Finance Ltd against accepting public deposits as the firm has converted itself into a non-deposit taking NBFC.
In a release issued on its website, the apex bank had said that it has come across instances of acceptance of deposits by Kerala-based firm.
"It has come to the notice of the RBI that Manappuram Finance has been accepting deposits from the public in its branches and offices and issuing deposit receipts in the name of Manappuram Agro Farms (MAGRO), a sole proprietary concern of V P Nandakumar...," the central bank had said.
It had added that acceptance of deposits either by Manappuram Finance or by group company Manappuram Agro Farms (MAGRO) is punishable with imprisonment.
Manappuram Finance was earlier registered with the RBI as a deposit-taking NBFC. However, in March, 2011, it became a non-deposit taking NBFC.
In today's statement, the NBFC further said that its board has decided to constitute an independent committee under the chairmanship of former RBI Deputy Governor Jagdish Capoor to review all aspects of the operations, systems, controls and organisation structure, including composition of the board of Manappuram Finance.
"The committee will appoint leading independent legal counsel and other advisors as appropriate to assist with the review. Further, the company will retain a leading accounting firm to supplement the in-house internal audit team," it said.
Law firm Amarchand Mangaldas and global accounting major KPMG will assist the committee in the review exercise.