Lack of organisation makes WB a breeding ground for chit funds

  • HT Correspondent, Hindustan Times, Kolkata
  • |
  • Updated: Mar 04, 2013 14:52 IST

Taking action against chit funds in West Bengal is an extremely given task, given that the state is one of the few whose finance department does not have a separate list for ponzi (fraudulent investments operations) multi-level marketing (MLM) companies and non-ponzi MLMs.

This is why chit fund companies have been mushrooming and thriving under the garb of MLMs or commodity or collective investment schemes, feel a section of the state’s finance department.

This is why, despite a January 2013 order by the finance department directing district magistrates to file detailed reports about chit funds operating in their districts, not a single report has reached them yet.

“Unless a separate list of ponzi and non-ponzi MLMs is available with district magistrates, it is difficult for them to identify these fraudulent schemes and prepare a report on their activities,” a senior state finance department official said.

However, preparing two separate lists is difficult and in order to initiate the process the state needs to adopt a coordinated approach.

The first requirement is legislation enabling the state to take suo motu action against erring chit fund MLMs. Although the Left Front government passed a similar legislation in 2009, it is still awaiting Presidential approval. Sources said that after the legislation was passed and sent for Presidential accent, there has been no active persuasion by the state for approval.

After this, sources said, the state would need to set up a chit funds department, following New Delhi’s example, and accordingly take up the task of preparing the two separate lists. “What is most dangerous is that we often get reports from districts saying that these ponzi MLMs are using silver screen celebrities to promote their schemes, a trap into which the uneducated rural masses easily fall,” the state finance department official said.


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