SFIO seeks more time for Saradha scam final probe report

The Serious Fraud Investigation Office (SFIO) has sought more time to submit its final report on the chit funds scam perpetrated by Saradha and other firms.

The probe is focused on more than 60 companies, mostly in the eastern states of the country, which are believed to have duped gullible investors by running fraudulent money-pooling schemes in the garb of chit funds.

Sources said the investigation agency has collected most of the information on the case, including from computer servers, and is in the process of preparing the final report.

SFIO, which comes under the Corporate Affairs Ministry, had submitted an interim report on the case last September.

The agency has sought time till March to submit its final report, sources said.

Originally, the final report was to be submitted to the Ministry in December 2013.

The case, mainly involving Saradha group companies, came to light early last year after investors complained of getting defrauded by these entities.

In its interim report, SFIO had said that companies under the scanner indulged in serious financial mismanagement besides siphoning off the funds by their promoters, who exploited regulatory gaps.

It also revealed that promoters of these companies tried to take advantage of multiple legislations with overlapping jurisdictions.

"There has been proliferation of innovative financial products in the market due to technological advancement and extensive use of the internet to market such products to investors," it had said.

While state governments are the appropriate authorities for regulations of such 'chit fund' companies under the Chit Funds Act 1982, the MCA had ordered a probe in April 2013 after public outcry over Saradha scam in West Bengal.

At that time, a Special Task Force was set up in the SFIO to look into the functioning of the so called 'chit fund companies' in the country.

In the wake of Saradha scam, various government agencies as well as regulators have been boosting their efforts to clamp down on fraudulent money pooling schemes.

An Inter-Ministerial Group has also been set up to ensure better regulatory co-ordination in dealing with the menace.

The group is to ensure proper enforcement of regulatory framework for MLM (Multi-Level Marketing) companies, Non-banking Finance Companies and entities running Collective Investment Schemes (CIS).