Modi’s “59 Minutes Loan” Scam Exposed

Soibal Dasgupta

Vinod Modha

On November 2nd 2018, Prime Minister Shri Narendra Modi launched a ’59-minute loan’ scheme for Micro, Small, and Medium Enterprises (MSME) but it has been revealed that a private company, Capita World Platform Pvt. Ltd. based in Gujarat is working as a broker and charging MSMEs ₹1,000 per application. Apparently, this company is collecting all the required data including the applicant’s GST user ID and password from MSMEs along with the loan application, only to give an in-principle approval for the loan; something that the Dalals sitting outside government offices do at ₹50. Precisely, just like how the dalal’s recommendation is irrelevant, the Gujarati company’s recommendation too is irrelevant to the banks that are applied for the loans.

The procedure of application includes registering on the website www.psbloansin59minutes.com. After logging in, one is required to upload all the required documents, followed by answering a few questions and then the website issues a letter stating that the application has been approved. The online procedure ends with receiving a mail from ‘No-Reply@CapitaWorld.com’ which contains the letter of approval. Most of the process on the website is without any human interference and to obtain the approval letter, one has to pay ₹1,000 + ₹180 tax as processing fee. However, whether loan would be sanctioned or not is decided by a scrutiny conducted by the bank itself. In short, whatever Capita World does is useless but if the loan is cleared, the company would get 0.35% as the processing fee.

For instance, just a day after Modi’s announcement, the statistics section on the website (it has been removed since) claimed 1.69 lakh registrations and loan approvals of ₹23,582 crore. By a simple calculation, a total of ₹169000000 + 0.35% of the amount approved for the loan, that is ₹82.53 crore, makes the total income of the company ₹994300000 in ONE day.

When we tried to gather information about Capita World Platform Pvt. Ltd. we came across some suspicious facts. The company was registered in 2015 and its registered address is 502, ANIKET, C.G.ROAD, NAVRANGPURA, AHMEDABAD, GJ 380009 IN. The company did not initiate any work for two years after coming into existence i.e till March 31, 2017 and its total revenue was only ₹ 15,000. However, the most important information we have was the name of its founder, Vinod Modha. While most media houses talked about his vast experience in business, all of them failed to mention his alleged experience in financial fraud as quoted by Security and Exchange Board of India (SEBI). When we tried finding SEBI’s order on the case of IPO scam, 2003- 2005 the order went missing from the SEBI website for unknown reason although traces can still be found.

However, through sources in the Bharatiya Janata Party, Gujarat we were able to get a copy of the order finding Vinod Modha among others deemed beneficiaries by SEBI. Further it had been reported in 2006 that the CBI too found Modha to be one of the beneficiaries of the scam.

Interestingly, the mentioned address in the order is the same address on which Capita World Platform Pvt. Ltd. has been registered. The electronic version of the 49 page order can be downloaded from here. His involvement in the high-profile scam is further confirmed by the report published on Business Standard News, dated 28th April 2006 in which he along with other accused were banned by SEBI for selling/buying shares in the stock market. Another banning order put on the National Stock Exchange (NSE) website can be found here.

Modus Operandi of the IPO scam

“Thousands of dematerialized accounts being opened on the same day with the same branch and being introduced by the same bank should have alerted the DPs at the time of opening of the dematerialized accounts. However the fact that DPs failed to exercise even this basic due diligence gives rise to a suspicion that they have actively colluded with the perpetrators. It is a matter of serious concern that Karvy-DP has opened such apparently benami / fictitious accounts working out to over 95% (42,056 nos) of the multiple dematerialized accounts in relation to IDFC IPO.” as quoted by the order of SEBI mentioned above. It must be noted that one of the alleged beneficiaries was Vinod Modha.

Vinod Modha in a letter dated 21st May 2009, proposed a settlement of the proceedings of the IPO scam, by neither denying nor acknowledging the charges against him. He agreed to pay ₹ 25,16,427 being the unjust profit made by him and also pay a sum of ₹ 9,83,573 being approximately 40% of the disgorged amount towards settlement charges. SEBI gave its consent via order no. CO/ISD/1336/346/2010 and the payment was made through draft no. 107234 dated 9th February 2010, payable at Mumbai.

We tried getting a copy of the circular but failed to do so. However, through our sources we got an electronic version of the circular CO/ISD/1336/346/2010 and the fact was confirmed from an archived circular on National Stock Exchange (NSE) website.

Even if Vinod Modha, the founder of Capita World Platform Pvt. Ltd . chose to settle the proceedings, the circulars do conclude that he did make an unjust profit that he paid back to SEBI. Under such circumstances, the selection of such a company against the norms of the SIDBI tender indicates dubious procedure taken by the government of India. However, the biggest question that remains unanswered is, how can the government trust a company with accessing important data like GST user ID and Password whose founder had his name in the list of beneficiaries of a scam that involved the use of benami / fictitious accounts. It must be noted that the 49 page order gives a detailed modus operandi of the scam and it is mentioned that a large number of bank accounts were created in the name of non-existing individuals with false documents. The million dollar question that should concern every Indian citizen, availing the scheme as a Diwali gift from Prime Minister Shri Narendra Modi is “Is there any assurance from Narendra Modi that the data received by the company and access to the financial database of the country won’t be misused?”

Moreover, the government of India could simply buy the software if it deemed it to be so innovative. Rather the public sector banks bought shares of the entire company turning it almost into a PSU. Ironically, all government computers use Microsoft Windows and Microsoft Office so by the same logic, shouldn’t the government buy the entire Microsoft Inc.? After all, the money used in investing in this private company came from the people’s pockets. Today, farmers are committing suicide and workers are still waiting for a review of the minimum wage while our government is using the taxpayer’s money for profiting private firms selected on apparently no basis.

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