Rules against chit funds stuck in Delhi - Saradha cash mess tip of iceberg, real scam is about fiscal law loopholes to protect investors

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  • Published 29.04.13

Ranchi, April 28: Sluggish economy and soaring personal aspirations are teaming up to create fertile ground for quick-rich chit fund schemes and non-banking finance companies such as the now-infamous Saradha to mushroom, but rules to give Jharkhand investors the much-needed safety net are hanging fire since over a year.

Jharkhand Assembly had early last year forwarded rules framed by the state’s institutional finance department for the President’s consideration under The Chit Funds Act (1982), a central act.

Top state sources said rules christened “jamakartaon ke hiton ke sanrakshan rule (rules to safeguard depositor interest)” were still awaiting the President’s consent.

The rules detailed how and what kind of action could be taken against companies if they are found duping people, which authority — from circle officers to district magistrates — might be entitled to take action against fraud chit funds or non-banking finance companies (NBFCs), terms of penalty, among others.

Jharkhand’s policymakers had suggested FIR within 36 hours of sealing of fraud offices.

For want of a concrete policy, the authorities in Jharkhand couldn’t act on time in the Saradha scam. For instance, though bureaucrats sealed Sahebganj district office on February 13, 2013, after reports filtered in from Bengal that the Sudipta Sen-led group was duping depositors, FIRs could be lodged only on April 17, over two months later.

As matters stood, police and district officials groped in the dark. As murmurs of discontent against Saradha grew, the state apparently directed district officials to lodge an FIR if they had sufficient evidence after probe.

The state directed deputy commissioners and police superintendents to verify documents of erring companies of the group, check Internet accounts, conduct special audits, among others. After sealing the company, authorities failed to do many such specialised jobs as they lacked the expertise to track such complex economic offences.

Jharkhand, inured to scams, also copes easily with them, it seems. As Union ministry of corporate affairs minister Sachin Pilot mulls over action against Saradha group and Bengal’s Mamata Banerjee government is rocked by the scam, ripples in Jharkhand, an important foothold of tainted firm, are surprisingly fewer.

Unlike mass protests and suicides in Bengal, no defrauded investor has come forward with a formal complaint. People still believe their money would be returned and want to steer clear of legal wrangles.

Saradha Realty India Limited regional office in the capital’s Ratu Road area is closed since April 18.

Meanwhile, at least six companies — the well-known Rose Valley included — have moved Jharkhand High Court challenging a state order that named them as chit-fund firms.

Under the tenure of Khurshid Anwar, former joint secretary in the institutional finance department, the then state government in November 2012 had warned people against “dubious NBFCs” who operate with the aim of misappropriating the hard-earned money of innocent investors.

The department also put up posters on Reserve Bank of India (RBI) guidelines to investors against fraud finance institutions. Secretary Awinash Kumar, who has joined recently, claimed to be unaware of facts. “Let me find out details. Right now, I am not aware of them,” Kumar told The Telegraph.