THE JVG SCANDAL
"My only mistake was that I shot my mouth off without really doing anything. Naturally,the media made me out to be a joker."
- Vijay Kumar Sharma, Chairman, JVG Group, in 1998.
THE DOOMED DEPOSITORS
In October 1997, the Reserve Bank of India (RBI) banned all non-banking financialcompanies (NBFCs) of the JVG Group of companies - JVG Finance, JVG Leasing andJVG Securities - from accepting deposits from the public. This was after an investigationrevealed that these companies had been accepting deposits in excess of their stipulatedlimits.Soon after, JVG downed the shutters of several of its offices in small towns of Maharashtra, Uttar Pradesh and Bihar, claiming it had detected huge irregularities in theoperations. The closing of the offices created a panic among the depositors and strongvoices were raised against the group in the media. In November 1997, JVG hurriedlyrented an office in Gurgaon (Haryana) to accommodate irate investors. Hundreds of investors and agents camped on the grounds of the office. The agents (or the field-workers), who raised deposits from investors on behalf of JVG, were extremely worried.They said they could not go back to their local offices without collecting the dues fearingthe wrath of the investors. More and more depositors and field workers teemed over thenext few days with hopes of getting their money back The situation seemed rather bleak with rumors of the JVG group being in deep financialcrisis. At this point, JVG Chairman V.K.Sharma (Sharma) dropped another bombshell onthe investors. He claimed that a majority of the certificates were fake and hence theywould not be paid back. For many depositors who had invested as little as Rs 500 andwho could not even dream of taking the dispute to court, it meant kissing their investments goodbye.
JVG GROUP - THE BACKGROUND
From being a small-time contractor earning less than Rs 2500 a month, Sharma went onto run a group, which on paper had an annual turnover of Rs 1000 crore, in just sevenyears. Known for his lavish lifestyle - his farmhouse in Delhi, his fleet of expensive carsand the helicopter he had taken on lease to tap deposits from small towns in north Indiawere talked about quite often.A graduate from Kurukshetra University, Sharma began hiscareer as a materials supplier to Swadeshi Polytex in 1979. Between 1985 and 1989,