The Shyamal Kumar Sen commission, constituted by the West Bengal government to probe the Saradha chit fund scam, will recommend the government to sell the assets of the company to compensate duped investors.
“Investors will get back their money...We will recommend selling assets of Saradha,” said Sen in an interview with Business Standard.
The Rs 500-crore fund announced by the West Bengal government might not be enough to compensate the investors, he said. Of the fund, about Rs 150 crore was to come from additional tax on tobacco products. However, West Bengal finance minister Amit Mitra recently told the state assembly the government would divert some of the funds generated from the additional 10 per cent tax on tobacco products to the state health department.
The commission received about 1.7 million applications from investors during the probe. Although most of these had deposited money in Saradha, investors of other companies such as Amazon, Suraha Microfinance, Sunmarg, ICore, Rose Valley and Alchemist have also registered complaints with the commission. “We are empowered to look into all similar companies, not only Saradha. But our focus is primarily Saradha,” Sen said. However, only about 3,500 applicants have been provided a hearing so far. The commission is trying to categorise the applications, so that bulk -hearing can be provided for fast completion of the process.
About 85 per cent of the complains pertained to investments less than Rs 10,000, while the highest amount invested by an individual in Saradha was Rs 27 lakh. However, Sen did not comment on the total money involved, as the data processing was yet to be completed.
Investors in Saradha ranged from domestic helps, rag pickers, taxi drivers to teenaged working people, he added. Recently, the state assembly passed the West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2013, which provides the government with powers of search and seizure and confiscation of property of dubious deposit-taking entities. However, the Bill is still awaiting Presidential assent to be converted into an Act. Meanwhile, crack down on unauthorised money-raising entities in West Bengal is proving to be a hard task for the markets regulator, Securities of Exchnage Board of India (Sebi), too. In the last one year, Sebi has passed at least four orders against deposit-taking entities. However, the business of deposit-taking, at least on paper, remains unscathed.
The companies have adopted a strategy of putting up a large number of agents as litigants in fighting legal cases against Sebi orders, that too in remote districts, according to a Sebi official. In the process, the companies are able to obtain ex parte stay on Sebi orders at district level courts, which is a major hindrance in curbing the operations of such companies.
AS THE COMMISSION SUMS IT
* Total application received by the Commission: 1.7 million
* Saradha investors accounts for most of the applicants
* Other companies involved in the the complaints: Amazon, Suaraha Microfinance, Sunmarg, ICore, Rose Valley, Alchemist
* Range of investments: 85 per cent of the complains pertained to investments less than Rs 10,000
* Highest amount invested by an individual in Saradha was Rs 27 lakh
* Profile of affected investors: Domestic help, rag pickers, cab drivers, teenaged working people, etc