One chit fund company donated Rs 20 lakh for treatment of a cancer patient. I took it,” this was the statement of Assam Chief Minister Tarun Gogoi.
When the Chief Minister of a State and a seasoned politician of the Congress party is unable to read into the motive of a chit fund company, how can the gullible people of the eastern and north-eastern parts of the country understand that they are being cheated by such companiesIJ
The issue of cheating by chit fund companies is now hugging headlines particularly after the Saradha Group was found duping thousands of people in the eastern and north-eastern regions. While people in the rest of India are not touched, why do chit fund companies target the eastern and north eastern regionsIJ The answer is very simple. The people along with their political leaders have scant knowledge in the investment and proper use of their hard-earned money.
Who is to be blamed for the growth of chit fund companies in these regionsIJ There should be no doubt about the lack of knowledge among people on money circulation by chit funds. But one thing must be pointed out that a weak legal regime helps chit fund firms thrive and do business.
It is found that chit fund companies take advantage of the weak legal framework. The Government of India, in 1978, made a legal provision of imprisonment of only two years for the culprits found cheating people through chit funds. later, in 1982, the term was extended to three years. There has been no provision of deterrent punishment for the culprits or any provision for saving the interests of the innocent investors.
This apart, while both the RBI (Reserve Bank of India) and SEBI (Security and Exchange Board of India), the regulators, have specific guidelines for the non-banking financial institutions (NBFI), there is no such check and balance for chit fund companies.
In Odisha, the State legislative Assembly passed the Odisha Protection of Interests of Depositors (Financial Establishment) Bill, 2011, making provision of punishment against unscrupulous chit fund companies. The Bill still awaits the President of India’s assent.
“We have already clarified certain questions raised by the Centre over the Bill. We hope it will get the President’s nod soon,” said Additional Chief Secretary, Finance Jugal Kishore Mohapatra.
And Odisha has a State-level taskforce under Mohapatra’s chairmanship which has started reviewing the situation and instructing the Crime Branch police accordingly.
According to provisions in the Odisha Bill, a person found guilty could serve jail term for 10 years and his/her properties could be confiscated. The proposed Act has the provision of returning money to investors by selling properties of the culprits. However, no one knows whether the law would be applicable to the companies which have already looted the public money.
The chit fund companies have already looted about Rs 1,500 crore from the gullible people of Odisha in last two years as evident from the cases registered by the Crime Branch.
Though Saradha Group boss Sudipta Sen is in the limelight and has been arrested by the West Bengal police, the main accused in cheating the people of Odisha is still at large; perhaps taking advantage of a weak legal framework.
“A very important case is against the Seashore Securities which cheated investors to the tune of about Rs 600 crore in Odisha,” a Crime Branch source said. Interestingly, while Sudipta Sen has already confessed his unscrupulous activities, Seashore Securities company head Prasant Das is still defending him.
Das, who became a man of crores from being a lecturer in a private college, has been granted bail and is roaming freely. The Crime Branch has challenged the High Court’s advance bail to him in the Supreme Court.
On a single day, on May 2, at least 127 hapless depositors made a queue to lodge their complaints with the State Crime Branch against the Saradha Group at Baleswar.
In a sense, the people of Odisha, who have already been cheated time and again by different chit fund companies, are certainly to be blamed. Despite losing their hard earned money, the investors in the State blame it on their fate.
Other money circulation companies in the State, against which strict legal action was initiated by the Crime Branch, include Ashore, Safex, Sai Pragati, Star Consultancy and Florish India. “An approximate amount of Rs 140 crore was frozen in the banks. At least 26 persons involved in these cases are so far arrested,” a senior CB official said.
Regarding the Saradha Group, the question arises: Who actually influenced the police not to register a case against the group in 2004IJ Who was the police officer who stopped taking action against the culpritsIJ Had there been any action against the group in 2004, many depositors might have been saved.
It is time the persons or the police officers who helped the Saradha Group in 2004 were identified. Will the Crime Branch’s Economic Offence Wing probe into the 2004 case in order to nab the personsIJ Besides, local leaders, who are hand in glove with such companies, also need to be identified.
Saradha has raked in Rs 50 crore from investors in Baleswar, which has emerged as the chit fund capital of Odisha, and Rs 15 crore in Puri.
Nasir Khan, the first blind man to play the hero in a Bollywood movie, had his share of over Rs 500 crore from gullible investors mostly in Baleswar district through several online investment schemes launched by him (and then invested part of the booty in making a Bollywood film featuring himself as the ‘hero’).
There are countless smaller companies which spring up at various localities, do ‘business’ mostly with daily earners for a few months before disappearing with the loot. It appears to be the biggest organised crime in the State.