Chit fund swindle: Is there no monitoring?
The sorry saga of West Bengal’s Saradha chit fund firm shows how easily systems are subverted to cheat ordinary people. When the cookie crumbles, influential political lobbies just fling vile charges at one another, hoping this diverts attention away from them.
In the Saradha case, lakhs of people with nowhere to go have been swindled of their life’s savings with the collapse of the ponzi scheme run by a former Naxalite sloganeer, no less, who had the endorsement of high-level Trinamul Congress politicians. Driven to despair, at least two investors in the dubious scheme have committed suicide.
The scheme ran chiefly in West Bengal and neighbouring areas, and is said to have been worth about `30,000 crore before collapse, indicating that millions subscribed to it. Historically, Kolkata has been the hub of chit fund-type rackets. Since colonial times, the great city cherished the entrepreneurial spirit, but India’s poorly developed financial system made little room for ordinary folk to enter. For people like that even opening a bank account was difficult. A good deal of very small savings, often no more than a few rupees a day, were delivered to well-organised financial sector racketeers in the hope they would make the money grow.
It is extraordinary that it’s still so easy to run such a scam in the era of Sebi and RBI regulations and monitoring, and when financial sector “inclusion” is the mantra of the finance minister and Prime Minister. It is hard to believe these worthy institutions could be oblivious that swindlers and profiteers had built financial empires in flagrant disregard of every imaginable rule or guideline. It is even harder to believe that West Bengal’s chief minister Mamata Banerjee should decide to raise the tax on cigarettes by 10 per cent in the state so that these tax funds may be diverted to raise money to partially bail out those who have been driven to the wall by the crash of the Saradha group. This is a perverse idea. It may be far better to sell Saradha’s physical assets, place the proceeds into bonds or government securities for a time, and then return the subscribers’ money with at least a small profit.
After the chit-fund kingpin was nabbed, the Kolkata police brought tame charges against him over non-payment of employees’ dues, and not of swindling lakhs of poor people. That tells its own story. The Serious Frauds Office, which is now handling the case, should take the matter to court after speedy investigations. We hope the main political forces in West Bengal won’t play petty politics with this case.
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