Punish them

Punish them

The CBI investigation ordered by the Supreme Court into the Saradha scandal will hopefully unravel the large-scale fraud perpetrated by the group on millions of investors and bring the fraudsters to book.

The CBI has set up a special investigation team to probe the affairs of the group which collapsed last year. The state level investigation conducted in West Bengal, where the group had concentrated its activities, were not very effective. The group had strong political connections in the state and, as the court noted, many influential persons were involved in it. The state government’s claimed efforts to give relief to investors were also very inadequate. The promoters of the chit fund had collected about Rs 20,000 crore from investors and the state’s relief fund of Rs 500 crore could not have helped many.  In fact the state government is accused of cover-up and collusion.
Over 2.5 million people have filed claims and most of them are poor people. Some affected people have committed suicide and many families have been wrecked and life-time savings have been washed away. The fraud committed by the group is not an isolated case of cheating.

Many  other chit funds have also cheated investors elsewhere  in the country. They raise money from common people, making attractive promises of returns, and vanish with it. The laws are inadequate and there is insufficient regulatory and supervisory control over their activities. The Securities  and Exchange Board of India (SEBI), the Registrar of Companies and even the Reserve Bank of India have been blamed for negligence or poor oversight.

An organisation representing investors who were duped by Saradha has claimed that even after the collapse of the group there are about 1,500 similar chit fund companies of varying sizes operating in rural West Bengal alone. One reason for the proliferation of such companies is the absence of normal and regular banking facilities and the non-availability of safe investment channels and tools.

Some states have government-run chit fund schemes which are working well. Scams like those relating to the Saradha and Sahara groups should prompt the authorities to tighten the laws and rules, strengthen regulation and provide safe and dependable investment methods to the people.