Professional Documents
Culture Documents
The Case
The Case
the CRB group of companies. The case examines how the CRB group was able to defraud the
investors and the regulatory authorities with ease. The role of RBI and SBI is also explored. The
case is so structured as to enable students to understand the way the CRB group of companies
defrauded the investors. The case is designed to expose students to the nature and extent of
scams in the financial sector and the modus operandi to study the role and responsibilities of
the regulatory authorities in the Indian financial sector and a critical evaluation of their
performance to study the consequences of the scam.
May 18, 1997 - hundreds of angry, frustrated and scared people stood outside the Reserve
Bank of India's (RBI) Mumbai headquarters under the scorching sun. They were waiting for
Chain Roop Bhansali (Bhansali), the head of the CRB Group of companies to arrive.
The CBI froze the bank accounts of the group companies and seized incriminating files and
other documents from the residence of the vice-president of the CRB group in Mumbai.
Following rumors that Bhansali had fled India and was hiding in Hong Kong or Canada, the CBI
sought Interpol's assistance to trace his whereabouts. RBI filed a winding-up petition claiming
that the continuance of the CRB Group was not in the interest of the public and depositors.
With the expiry of the RBI deadline, the CRB Group collapsed, shattering the dreams of
thousands of investors across the country.1
He then moved to New Delhi to join one of the country's leading registrars of companies.
However when Bhansali was caught short-charging the registrar's clients, he had to leave.
In May 1996, CRB Caps opened a current account in SBI's main Mumbai branch, for payment of
interest, dividend and redemption cheques. The payment warrants could be presented at any
of the 4,000 SBI branches for payment.
The collapse of the CRB group seemed to be a fraud allowed by supervisors despite the
regulations in place. The lack of clear communication channels between the banks, RBI and the
government seemed to have worked to Bhansali's advantage to a great extent.
The Aftermath
The CRB scam took the whole nation by storm. At one point, the Union finance ministry held a
meeting everyday to get to the brasstacks of the CRB fiasco. In a meeting with SEBI, the
finance minister criticized the regulator severely.