Promoters of a Kerala-based non-banking financial company, which faces several cases of fraud from depositors, were arrested on Saturday for allegedly defrauding investors of nearly Rs 2,000 crore.(Representational Image)

Promoters of a Kerala-based non-banking financial company, which faces several cases of fraud from depositors, were arrested on Saturday for allegedly defrauding investors of nearly Rs 2,000 crore.

Pathanamthitta district Superintendent of Police K G Simon said Popular Finance, based at Vakayar village in Pathanamthitta district, did not have the required licence from the banking regulator.

On Saturday, the company’s managing director Thomas Daniel and his wife Prabha, who is also a partner, were arrested.

Their daughters and senior executives of the firm, Rinu Maria Thomas and Riya Anna Thomas, were detained at New Delhi airport on Friday, trying to leave the country in the face of complaints from aggrieved depositors, the police said here on Saturday.

The state police had alerted airports across the country after Rinu and Riya went absconding.

Pathanamthitta SP Simon said, “Our preliminary assumption is that the firm’s deposit collection would go up to Rs 2,000 crore. We are getting complaints from across states, where it (Popular Finance) has branches. As per complaints already under police process, Rs 300 crore is at stake.’’

He said, “We don’t think (people’s) deposits are safe with the firm. We realised that a chunk of deposits has been shifted overseas. A probe is on.”

Police sources said Popular Finance, which has stakes in several non-banking verticals and financial services, had offered high interest rates for deposits to lure customers.

“At one time, they had offered interest up to 18 per cent, which went down up to 12 per cent. When unreasonable interest was offered for deposits, the number of investors grew exponentially,” an official said. “They were paid interest regularly, which created an impression that deposits were safe, attracting more investors.”

But many investors did not realise that the interest for monthly payment was lifted from the deposit itself, the official said.

Sources said that the nationwide lockdown implemented in March reduced the flow of fresh deposits, a chunk of which the firm earlier used to pay to investors whose deposits mature.

Gold pledged with the firm for loan have been re-pledged in banks by promoters for further loans, it is learnt.

The issue emerged when the firm could not repay some investors for their matured deposits. When the promoters filed an insolvency suit in a local court, panic-stricken depositors came in hordes, putting the firm in a tight spot, a source said.

Wison Varghese, who said he is a duped investor, said around Rs 50 crore has been collected at the firm’s Anchal branch in Kollam district. Many depositors are retired people, who banked on monthly interest from their deposits,
he said.

“I am a Gulf returnee and deposited Rs 15 lakh in two instalments. The amount attained maturity six months ago. I want to get back at least the principal amount,’’ Varghese said.

Popular Finance has 274 branches across the country, mainly in South India.