NEW DELHI ,MAY 23: Finance Minister P Chidambaram on Friday ordered RBI Governor C Rangarajan to put together a safety net for fixed deposit holders of CRB Capital Markets. The governor was also told to tighten guidelines pertaining to non-banking finance companies (NBFCs) to ensure that such fiascos did not recur.

The governor was summoned by the finance minister for an hour-long meeting in North Block to take stock of the situation and chart out a damage limitation exercise. The meeting was attended by Finance Secretary Montek Singh Ahluwalia and Chief Economic Advisor Shankar Acharya.

Chidambaram has also ordered the RBI to conduct full scale audits of all NBFCs in the country immediately and bring instances of asset-liability mismatches to the notice of the finance ministry. A time limit had reportedly been set for completion of the audits.

The finance minister also emphasised the need to speed up the parallel investigation into extension of loans by public sector banks to CRB Caps as also the routing of payment of interest and principal amounts to depositors through these banks without adequate backup funds.

Several safety net options were discussed in the meeting, including bringing NBFC deposits, on a pre-dated basis, under the aegis of the Deposit Insurance and Credit Guarantee Corporation. The Equipment Leasing Association was working on a report to bring NBFC deposits under an insurance scheme. The report was to be submitted next month but the finance ministry apparently wanted an implementable report by mid-June.

What also figured in the discussions was the methodology to be adopted to bring all "blade" companies under enforceable guidelines. The RBI was expected to assist the finance ministry in drawing up the regulations. These companies had escaped exhaustive supervision so far by the finance ministry, the Securities and Exchange Commission of India (SEBI) and RBI due to loopholes in the law.y

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