CHENNAI, June 18: Some 31 finance firms have shut shop in Tamil Nadu between August 1996 and March this year. The first to go bust was Snehaam Finance and its group companies.

Though official estimates of the amount mopped up by these firms is put at around Rs 200 crore, sources say the figure could be higher. This is because the deposits include unaccounted money in many instances. Among those who have sunk in unaccounted money include former state ministers Madhusoodhanan, Selvaganapathy and Kannappan. The ministers are said to have a `hand' in such companies as the Eswari group, Maxima, GNS Nidhi, Ramesh Cars and Multiple Finance. Sasikala, Jayalalitha's close aide, is rumoured to have strong connections with the Eswari group.

Between August and October last year, there were daily reports of investors being turned away from finance companies by armed thugs and of interest warrants bouncing. The police made some promoters cough up money to the tune of about Rs 2 crore. The state government is helpless as all these firms are unincorporated bodies.

The amendment to Section 45 (S) has somewhat cramped the mobilising efforts of the fly-by-night operators. The section leaves out firms collecting deposits for manufacturing purposes. A close look at the list of defaulting firms shows that there are many jewellery manufacturing firms.

The CRB Capital Markets collapse has by itself not had much of an impact on deposit collection in the state. In fact, Sundaram Finance exceeded its year's target within 10 months and closed its fixed deposits counter earlier this year. Ashok Leyland Finance and the Investment Trust of India (ITI) have also seen a surge in deposits.

The list of default companies includes: Snehaam Finance and group companies; Abirami Finance; Devi Gold House and GNS Nidhi (associate firms); Eswari group of companies; Maxima group of companies; Bharathi Gems and Jewellery; Better Gains; Amudha Gold Palace; Car Centre Finance; Dakshina Finance and Investments; Enfield Business Finance; Green Heaven Finance; Lakshmi Gold House; Maduvanthi Finance; Malathi Finance; Multiple Finance and Investments; New India Finance; Nagalakshmi Finance; Omega group of companies; Ramesh Cars; Madras Motor Finance; Riches and Cliffs; Spartan Finance; Srinivasulu Chetty Jewellers; Surya Estates; SKS Gold House; Swiss Finance; Saravana Credit and Finance; Thirumagal group; Venchura Finance and Imperial Finance.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.