‘Trust’ no priority in the so called trust business

While the Saradha Chit Fund scam has snowballed into a political controversy in West Bengal, it has also brought the chit fund business, now known as the ‘cheat’ fund business, under the scanner.

In the last few years thousands of fly-by-night chit fund operators have cheated millions of gullible people by making attractive money-back offers for periodic investment of money. B. Surya Prakash Rao, President, Andhra Pradesh Federation of Chit Funds outlines the principle of the business saying, “Chit fund business is basically a trust business.”

However, trust is the least priority with chit fund companies who wind up within months, operators vanish overnight, leaving investors high and dry. Even in cases where the owners of the-se companies are caught, it is difficult to assess the scam financially in the absence of proper records of money invested and by whom. The law states that every chit fund company should be registered with the Registrar of Chits. But subscribers fail to check the authenticity of the company. Surya Prak-ash Rao, says, “We have been pleading with the government to regulate chit fund companies.” But it is not easy task for the government, experts say, as these companies sprout up in localities and only enrol locals subscribers. G. Vijanthi, legal atto-rney, Crime Investigation Department, says, “The checking authority is not doing its job while unregistered companies preying on gullible investors.”

Chit fund companies in the state were governed by the Andhra Pradesh Chit Fund Act, 1971. Two years ago, the government adopted the Central Chit Fund Act, a move which was decried by several players as detrimental.