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Sharadha Chit Fund: All You Need to Know India has become a hotbed of financial scams, ruining the lives of many

By Madhurima Roy

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The Saradha Group financial outrage was a noteworthy budgetary scandal that was shut down in 2013. Calling it a major financial scandal is an understatement as it is by far the biggest Ponzi scheme in India. The supposed outrage took a political turn when Mamata Banerjee, the Chief Minister of West Bengal, who also heads the Trinamul Congress came to the fore. The defunct privately held Saradha Group was a consortium of over 239 private companies that were believed to be running a number of investment schemes. The purpose of the contribution of each of these organizations was to trick the Securities and Exchange Board of India (SEBI).

By the time when the plan was crumpled, the chit fund had already bagged INR 4000 crores from over lakhs of investors, who hailed from various sectors like tours & travels, realty, lodging, resorts & inns and media & entertainment.

But How did the Scheme Attain Popularity to Such an Extent?

The chit fund had built its image through the backing of film stars, interests in prevalent football clubs, responsibility for news sources, and sponsorship of social festivities.

The opposition had alleged that Mamata Banerjee's Trinamul Congress had close links with the chit fund group. They also claimed that the Chief Minister had inaugurated two Saradha offices. The perceived closeness supposedly also helped it to get investors and agents on board. Trinamool Rajya Sabha MP Kunal Ghosh was reportedly heading the Saradha's media division. Another Trinamool MP and actress, Shatabdi Roy also got featured in Saradha's promotional material and helped attract investors.

As a result, the plan had seamlessly extended to Odisha, Assam, and Tripura, and the count of financial specialists went to a number as high as 17 lakhs.

Financial scandals and cheat funds are not anything new in India. Among the many, few of the latest ones are the 2G case (2008), Common Wealth Games Scam (2010), Indian coal allocation scam (2012), Punjab National Bank Scam (2018) and many others. These scams went on in circles. Yet the country continues to repeatedly fall in the hands of these scams. But why does the country continue to fall in the hands of such schemes so frequently? The promotions and appearances made by the celebrities are not the only reason behind the scheme taking such a huge shape.

India constitutes a huge slice of rural population with small earnings and little or no knowledge about right or wrong. As a result, they are impressionable and gullible enough to be lured by fraudsters to invest in such schemes with promises like doubling or tripling their money in no time. Being financially handicapped, these innocent lives fall in their hands very easily. In this case, the financial specialists, generally down-and-out people from the Naxal-belt in eastern India, were ensured a 50 per cent for every annum return on their theory, that is, twofold the money in three years.

The ongoing biggest Ponzi Scheme, thereby answers the question why India has become a hotbed of such schemes and West Bengal apparently its capital.

Actions of the State and the Central Government

In the repercussions of the outrage, the State Government of West Bengal where the Saradha Group and a large portion of its speculators were based established a request commission to examine the breakdown. The State government likewise set up a reserve of $70 million to guarantee that low-salary financial specialists were not bankrupted.

The Central government, on the other hand, through the Income Tax Department and Enforcement Directorate propelled a multi-organization test to research the Saradha trick and comparative Ponzi plans. In May 2014, the Supreme Court of India, between state implications, conceivable global illegal tax avoidance, genuine administrative disappointments and affirmed political nexus, moved all examinations concerning the Saradha trick and other Ponzi plans to the Central Bureau of Investigation (CBI).

Who were Arrested?

It is needless to mention that Sudipto Sen, the founder of the scam was put in handcuffs. Even his associate Debjani Mukherjee met a similar fate and was thrown behind the bars.

Other prominent foul players who were captured for their association in it fund were two Members of Parliament (MPs) - Kunal Ghosh and Srinjoy Bose, former West Bengal Director General of Police Rajat Majumdar, Indian politician and former MLA Madan Mitra and a prominent football club official Debabrata Sarkar.

The chit fund scheme swelled to such an extent that a large portion of group's funds was also laundered to Dubai, South Africa and Singapore.

The trick has frequently been contrasted with the Sanchayita venture trick, a multi-crore rupees cheat fund that surfaced in West Bengal during the 1970s.

Madhurima Roy

Senior Correspondent, Entrepreneur India

A journalist for more than 4 years, I have been covering businesses & start-ups, technology and business leaders. While writing is my only language, I also indulge in dancing, painting,.. and anything creative!
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