State crime branch officers in touch with WB probe team for Saradha case

A list of fake chit fund organisations allegedly cheating people in the guise of profitable schemes has been prepared

Waking up to the interests of small depositors in Odisha in the backdrop of large scale chit fund scam by Kolkata-based Saradha Group, the state government said the crime branch team is in touch with its counterparts in West Bengal to decide on appropriate course of action.

"The officials of economic offences wing under the state crime branch have collated some information relating to case of chit fund fraud by the Saradha Group from Balasore and Puri. The additional director general of police said they are coordinating with their counterparts in West Bengal to decide on appropriate action to be taken”, said J K Mohapatra, additional chief secretary (finance) cum development commissioner.

Mohapatra said a list of fake chit fund organizations allegedly cheating people in the guise of profitable schemes, has been prepared. He, however, refused to disclose their names, stating it would not be appropriate to divulge investigation details.

Additional director general of police B K Sharma declined to speak anything when asked about the action taken in connection with the Saradha chit fund fraud.

Mohapatra said, to protect the interests of small depositors in the state enticed by apparently lucrative schemes, the economic offences wing will undertake an awareness campaign on a continuous basis.

"The first thing we can do is to generate adequate awareness among the people who are vulnerable to fake investment schemes. People tend to be enticed by schemes that promise high interest rates or high returns on investment. They do not check the antecedents of companies nor they make sure if the company has authorization or not”, he told the media after the second meeting of the coordination committee formed to protect interests of small depositors.

The committee has home secretary U N Behera, additional director general of police B K Sharma, Reserve Bank of India (RBI) regional director V Ramchandra Rao, the registrar of companies (Odisha) and a representative from the Securities and Exchange Board of India (Sebi) as members.

The state government has also passed a law called 'Odisha Protection of Interests of Depositors Act' to curb activities of unscrupulous chit fund operators. The law is awaiting approval of the President of India.

"The Centre had sought some clarification on the law which we have sent a month back. Enactment of this law will enable us to strengthen preventive and punitive measures against fraudulent financial establishments. Our law is on the lines of the legislation enacted in Tamil Nadu that has been validated by the Supreme Court”, Mohapatra stated.

He said the economic offences wing will be strengthened and manpower needed in terms of more investigation officers will be provided. An officer each from Sebi and RBI would be brought on deputation, he added.

Lately, there have been rampant incidents of some unscrupulous financial establishments and fly-by-night operators duping people, especially in small towns through chit funds, multi-level marketing schemes and collecting investment schemes. The frequency of such cases of fraudulent deals have been particularly high in Balasore in the state's northern belt where people have been more vulnerable to schemes offered to them in the guise of profitable investment.

In the absence of regulatory and supervisory cooperation between Central and state agencies, such entities mobilize large sums of money through fake schemes.