Illegal chit fund firms on the rise in Andhra Pradesh
KAKINADA: The number of small and unregistered chit fund companies is growing rapidly, with a matching increase in their acts of financial frauds. Many subscribers are losing the money they put in chit funds. Mostly, those from the middle and lower middle classes are falling victims to such fraudulent activities of unregistered chit funds.
These units operate mostly in rural areas. To start with, they lure their relatives and friends and then increase the number of subscriptions. They pay money via auctions for the first few chits. Then they would stop paying the auction amounts to the subscribers and lure them with an offer of high interest. When the subscribers press for the money, they would be kept waiting for months.
In urban areas, the chit fund units are luring milk, vegetable and fruit vendors.
The Registrar of Chits department is allegedly not taking such things very seriously. It often fails to trace out unregistered chit fund organisers and does not take action against them.
The subscribers say the assistant registrars of chits and other employees of the department are aware of the fraudulent activities of unregistered chit funds, but no action is taken against them due to corrupt practices in the department as also due to the contacts these chit fund organisers have with the high and mighty.
In Indrapalem near Kakinada, a chit fund trader duped the subscribers of nearly Rs 1 crore. “I initially got a subscription for a Rs 1 lakh chit and he promptly gave me the money. Later, he enlisted subscribers for fresh chits of Rs 5 lakh and Rs 10 lakh. After the auction, he offered us a high interest of Rs 2 per day and did not pay us the auction amount. He gave us interest for six months. Then he stopped the payment,” a female victim said.
“When I asked for my principal amount, he expressed his inability saying he has invested the amount in real estate and it would take time for the money to come out of it,’’ the woman said, weeping.
District registrar P.R. Patnaik told Deccan Chronicle that there are 94 registered chit fund companies in erstwhile East Godavari district. Out of these, misappropriations or other unlawful activities were detected in six -- including four Margadarsi branches and one Jagajanani chit funds headed by Telugu Desam leader Adireddy Appa Rao.
A chit fund company by name Surya Chandra at Pithapuram did not get registration and action was taken against the organisers, she said.
She said officials of the Chit Funds division in the stamps and registration office are conducting raids and taking action against the unregistered chit fund firms. If anybody lodges a complaint, a case would be registered against the errant, she added.