NRI admissions in Maharashtra private colleges under ED lens

NRI admissions in Maharashtra private colleges under ED lens
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First Published: Sat, Feb 21 2009. 12 30 AM IST

Updated: Sat, Feb 21 2009. 02 58 PM IST
Mumbai: Four years after the income-tax department (I-T) uncovered several instances of tax evasion by private engineering and medical schools in Maharashtra, the enforcement directorate (ED) is scrutinizing admissions of non-resident Indian (NRI) students in medical, engineering and business schools across the state for Foreign Exchange Management Act (Fema) violations.
A senior ED official, who spoke on condition of anonymity, said: “We suspect that some colleges are taking donations and admitting general category students through NRI quota, thus violating norms. We need to find out if the students that have been admitted under this quota are really NRIs.”
The investigation, he said, is at an advanced stage and will be concluded in two months.
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The list of institutions being probed includes some prominent B-schools such as Narsee Monjee Institute of Management Studies (NMIMS), KJ Somaiya Institute of Management Studies and Research, and Welingkar Institute of Management Development and Research, the ED official said, declining to give details.
Rajan Saxena, senior adviser to chancellor and officiating vice-chancellor of NMIMS, told Mint, “We are not aware of any such notice. We don’t have any NRI quota at NMIMS University.”
The “management quota” seats are in accordance with the guidelines of the government, however, the fees for management quota are twice the regular fees.
Officials at KJ Somaiya said, “We had received a query from ED and we have informed the department that the institute has not admitted any NRI students in the last five years.”
A faculty member at Welingkar Institute, who did not wish to be identified said, “There are hardly any students under NRI quota, so there is no question of any violation.”
The ED official said that the quota might be used in two ways: one would be to take donations to admit NRIs. The other would be to admit resident Indians through the NRI quota. The scope of investigation, according to the department, is to ascertain if there has been any Fema violation.
If any institution is found to have violated the norms, ED can issue a show cause notice and impose a penalty of up to three times the total amount involved. The All India Council for Technical Education (AICTE), the regulator for technical and business education, can withdraw its accreditation, which is mandatory for offering technical education
“We have asked all private colleges in Maharashtra to submit a list of students admitted through NRI quota in the last few years. We want to check if the rules prescribed by AICTE have been followed transparently,” the ED official added. “We have also contacted AICTE to understand the procedure laid down for admissions through this quota.”
According to AICTE norms for self-funded institutions, 50% of the seats are treated as free seats and the balance 50% as paid ones. Also 15% of the seats over and above the total strength must be set aside for NRIs, who must pay for these. However, for an institute to be eligible for the NRI quota, AICTE requires it to have hostel accommodation and a teacher-student ratio of at least 1:15, among other things.
NRIs can enrol in Indian institutions only through this route. AICTE has no say in the fee, which is fixed by state-level fee committees.
According to the I-T Act of 1951, an NRI is a person who has not been living in India for nine out of the previous 10 years or who has not been in India for a period of 730 days or more during the preceding seven years. Foreign nationals and persons of Indian origin, have an additional 15% quota.
With 155 engineering colleges, 126 B-schools, and about 74 medical, dental and pharmacy institutes, Maharashtra is among the top three states in the number of private technical education institutions.
In 2005, the I-T department conducted raid on eight top engineering and medical colleges in the state, along with 70 of their affiliates, which were suspected of running donation rackets, in which seats are allotted in return for financial consideration. The I-T officials had seized Rs8 crore, along with fixed deposits worth Rs50 crore.
Some donations were found to have been made through the NRI quota fees, which is how ED entered the picture, since foreign exchange violations fall under its jurisdiction.
Graphics by Sandeep Bhatnagar / Mint
Pallavi Singh in New Delhi contributed to this story.
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First Published: Sat, Feb 21 2009. 12 30 AM IST