Letters: A blanket ban on chit funds

This refers to Pratip Kar's article "Saradha: Define the scam correctly first" (May 1). An entity's popularity is certainly no assurance of the legitimacy of its operations. But the important issue is making people aware of this fact. Those who lose their money in such schemes are poor and innocent - either lured by celebrity-endorsed advertisements or the belief that the company is too large to fail. It's much easier for them to believe such advertisements vis-à-vis the Securities and Exchange Board of India (Sebi's) warnings against these astronomical-return schemes (given the poor visibility of the Sebi advertisements)? Why not put a blanket ban on chit funds and Nidhi companies? Also, why not limit the number of companies that an individual can register in his name or his associate's name? Allowing the registration of hundreds of companies of the related parties will entail such companies to do gullible related-party transactions to earn unethical and illegal advantages.

Ravi Kant Mumbai

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