The Saradha chit fund scam which shook the TMC Government for some time after becoming a national debate has prompted administrative changes for the Delhi Government.
In a bid to save small investors from chit fund fraud in the national Capital, the Sub-Divisional Magistrates (SDMs) and Delhi Police have given with immediate powers to arrest the culprits of the defaulting financial establishment, attach their property and auction it to recover money. In other words, this has provided more powers to government authorities and Delhi police to save small investors from chit fund companies’ fraud.
As part of the Government’s efforts to protect small investors in the wake of the Saradha crisis, the Delhi Government’s Finance Department has notified Rules of the Delhi Protection of Interests of Depositors (in Financial Establishments) Act 2001 after 13 years.
As per the Rules, the Delhi Government can give an interim order of attachment of property of the defaulting financial establishment. In the case of attachment of land, the principle of comparison with the market price or the price closet to the market price rate should be used but it should not be lower than the rate notified by the competent department.
The Rules include higher penalties for offences and rein in unregistered funds, according to two finance ministry officials aware of the development. For every registered chit fund, there are 100 that are unregistered, according to industry estimates, and the maximum penalty for chit funds is as low as Rs 5,000 in States such as Delhi.