Investors allege Muthoot mis-sold Srei bonds

Around 49 people, many of them retired, who have had dealings with Muthoot over a decade have come forward so far, some of whom have approached the local police. Mint spoke to four such investors and a lawyer appointed to legally pursue their case. He said that 49 people have invested together 10.2 crore in Srei Appliances bonds in 2017 and 2018.

Investors said that employees of Muthoot claimed that Srei was a subsidiary of Muthoot and was effectively part of the Muthoot group while selling the NCDs. He said he came to know that his money was in a Kolkata-based company when the principal and interest were not paid after maturity, sometime late 2022, a year after Srei filed its bankruptcy.

Susan Mathew, an investor from New Delhi, said she first took a gold loan from Muthoot in 2009 and has been a customer ever since. In 2018, Mathew said he received a call from an employee about a high-return investment opportunity. “My husband and I invest together 34.7 lakh under the assumption that we are investing in Muthoot,” said Mathew, a 59-year-old retiree. Srei NCD.

Mathew said that he tried to meet the company’s top executives in December 2022 but was asked to wait for a few months. The investors said they later came to know about Srei’s bankruptcy and decided to gather as many affected people as possible to file a writ petition in the Kerala High Court.

“Neither the Promoters nor the Directors of Muthoot Finance or any of the Muthoot Group companies have any financial interest in Srei Equipment Finance Ltd. Muthoot Securities Ltd. has acted as one of the brokers in the Public Issue of NCDs made by Srei Equipment Finance Ltd. Worked in.” KR Bijimon, executive director and chief operating officer of Muthoot Finance, said in an emailed statement.

Bijimon said Muthoot Securities, in an arrangement, used the branch network of Muthoot Finance to collect application forms and checks from investors investing in NCDs of Srei Equipment Finance. “Repayment of interest/principal of Srei NCDs will be decided by the Committee of Creditors (CoC) headed by the Administrator, Reserve Bank of India (RBI),” he said.

Meanwhile, investors said they are disappointed with how Muthoot has treated them after years of association. Another investor Molly Mohan said that he has invested 5 lakh each in the name of his two sons and awaiting repayment.

“My money was in a private bank, and a branch manager in Muthoot told me about an investment opportunity. I did not know that my money was being invested in Srei as the checks were issued in favor of Muthoot Securities,” Mohan said.

To be sure, it is not uncommon for brokers to receive checks in their name in order to invest on behalf of clients. In fact, Muthoot’s Bijimon said that in case of purchases from the secondary market, investors can issue checks in the name of broker Muthoot Securities.

There is also the case of KL Thomas, a retired engineer from Kerala who invested 6 lakh in 2018 and a certificate was issued stating that the investment was made in Srei Equipment Finance. Thomas said he became suspicious, and when he inquired, he was told that Srei was a related company.

Experts said a comprehensive strategy is needed to effectively deal with mis-selling in India.

“In respect of retail investors who have invested cumulatively 10 crore in NCDs of Srei Equipment Finance, it is yet to be determined whether their allegations are substantiated,” said Sonam Chandwani, managing partner at law firm KS Legal & Associates.