This year they have sold their investments in government securities aggregating Rs 47.93 crore forcing the auditors to make an adverse remark in their report. NBFCs, as a measure of prudence, are expected to maintain liquid assets compulsorily in unencumbered securities to the extent of 12.5 per cent of their public deposits, which in the case of these two companies would work out to about Rs 54 crore. The companies, in their annual report for 1997-98, have blamed the `drastic changes in the NBFC regulations' for their failure to maintain themandatory liquid assets, adding that they are `in the process' of building up the same.

According to senior RBI officials, the regulator is likely to slap a fine on the companies for not maintaining liquid assets.Though both SIL and STFC were forced to comply with prudential norms this year (they had no choice as RBI re-issued directions after explicitly arming itself with the necessary powers by amending the RBI Act), SIL had to juggle with its advances to ensure that the provisioning was kept on the lower side.

The company has made a further provision of Rs 2.39 crore over and above what was already provided earlier. This additional provisioning would have paled into insignificance had the company not rescheduled loans to the tune of Rs 86.55 crore. According to sources, these loans were granted largely to associate companies. These loans till last year were unsecured but RBI, it is learnt, had instructed the company to get these loans covered by securities, which the company did.

Both SIL and STFChave also adjusted unidentified debit balances (that is due to them) in the parties' suspense account against unidentified credit balances (that the companies owed to the borowers) available in the parties' suspense account.