Millennium Post

Looting the poor for minting money

The Saradha group chit fund scam that has rocked the collective conscience of the nation is, first of all, not a recent phenomenon; nor is it an isolated incident that has been brought to light by the severity of its fraudulence. In fact, Sudipta Sen’s Saradha group is one amongst the many chit fund companies mushrooming not just in West Bengal, but have a considerable presence all over the country, particularly in South Indian states like Kerala and Tamil Nadu. Setting up of the chit fund companies started in about 1980s in India, wherein duplicitous savings schemes were announced, and money was being collected from the poor and lower middle class people without an exchange of a mortgage or a guarantee, although promises of lucrative returns were made aplenty. The Section 2(b) of the Chit Funds Act, 1982 said that the ‘chit’ indicated a transaction by which a person entered into an agreement with a specified number of persons to provide regular installments of certain amount of money, in order to be eligible to win a certain ‘prize money’ that would be determined by lottery or auction. This is basically an unlawful collection of money that has gone unchecked by the authorities, particularly regulatory bodies like SEBI and RBI, and even the central or state governments who often neck-deep in their own involvement in the perpetuation of these pervasive scams targeting the gullible and the backward classes.

Since chit funds are operations wherein money is amassed without the guarantee of being converted into assets that include the stakeholders within their profits, and since no security is given to the people contributing money to these ‘ponzi’ schemes (after the infamous Italian-American scamster of 1920s Carlo Ponzi), these schemes are nothing but absolute theft of the hard-earned money of oridinary people.       Chit fund companies are non-banking financial corporations, which need a different set of rules than the regular banking and insurance companies. Unlike in policies like having fixed deposits in banks, or creating a life insurance, where the amount of installment money is usually much higher, chit funds profit on the fact that the amount collected per month or at agreed upon period of time are much lower than other financial policies. Moreover, in order to combat negative criticism coming rival companies or from government bodies, the money assorted is often used to set up media houses or invest in films, as is evident from Sudipta Sen’s ‘tell-all’ letter to CBI. It is appalling that the regulatory bodies or the legal institutions have not considered it necessary to take preventive measures to stop the spread of such open larceny and playing with the savings of the poorest of the poor.  This is extortion happening at the highest level, with the full backing of political leaders, including those who have a massive national presence. It is in this context that Sudipta Sen’s letter must be read, and every name that has been referred should be thoroughly probed.
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