They are credulous; they are gullible; they are vulnerable. They are decent people, more human than their exploiters, kinder than their cheaters, humble than their suckers. They are the poor of the human society. They have been cheated for ages in the name of religion. In modern times too their exploitation goes on unabated. Today it is economic or financial cock and bull story of savings or investment that wreaks havoc on millions, driving them to commit suicide or devastates them financially. The unabated operations of the Chit Fund companies in all states of India only tends to strengthen this conclusion. Take the story of the Saradha Group of chit fund company of West Bengal, which has swindled about 25,000 crores of rupees of poor people trapped in its alluring savings and investment schemes, promising enormous growth prospects. Its Chief, who was on the run along with two other Directors for almost a week, has been arrested only yesterday. It would have meant a happy ending to a sordid drama were it the only Chit Fund company in West Bengal or India. Unfortunately it is not; in West Bengal alone, 73 Chit Fund companies are operating according to a government minister. If cheating were not such a profitable business, how could so many companies operate in just one state?
Their number is in direct proportion to the number of poor people in any area- the larger the number of the poor, the greater is the number of the companies! Such grand frauds can never be carried on without a criminal nexus between the government and its agencies and the companies. Setting up a company in India is such a difficult job for genuine entrepreneurs that it costs a huge chunk of money in illegal payments to whosoever gets the opportunity to see the application. They have the expertise to discern the genuine from the fake, which they are prepared to allow for a premium. Corruption is the hallmark of governance in India. It leaves no option to the entrepreneur except to pay up the illegitimate extortion. It helps con companies to mushroom, cheat the poor and close shop before the law can catch them. It is not only chit funds but equity market too. Companies like the Mafat Lal Finance Co. had disappeared with the investors’ money, which it collected in the reputed name of the Mafat Lal Group in the large industry segment. The Department of Company Affairs (now corporate Affairs), ROC, SFO etc could not confiscate the assets of the owners and compensate the investors. The number of fly by night companies entering the equity market is not small by any reckoning. They put big names on their boards of directors while entering the market but cannot be reached after a few months. The law or the implementing agencies have pleaded helplessness whenever the scandal of any such company gets exposed. The SEBI(Securities & Exchange Board of India) has asked the Sahara Group to return Rs. 24000 crores to its investors, which the company has been evading for months. Last it was learnt that it is unable to provide the list of its investors, which means it accepted deposits from unknown sources i.e. black money or money laundering. There are many such companies sitting over piles of investor money, but the Regulator(Reserve Bank of India) knows little about it.
The other mechanism to loot the poor people is the lottery. Lottery has become addiction to millions of poor, who dream of luck smiling on them one day, and ruined thousands. Cheating succeeds on the art of fooling people by sweet talking. When it becomes somebody’s business to cheat others, he or she can develop the right skills under the able guidance of a Guru!. This skill of fooling people successfully is much in demand in politics. That is one of the strongest bonds between the politician patronising crime, the corrupt government machinery and the con artist. When windfall gains accrue, even the most virtuous suffer a temporary blackout, such as when a painting is sold for 10 million rupees or a silly novel fetches a royalty of 20 million or song is bought by some film for 2 million. Dependence on any such lottery can prove costly, especially when the company promising to run the lottery for the state government disappears with all the collection like any Ponzi company. The sufferer, as in other cheating cases, is the poor man and gainer the con man. The law does not help the conned nor does it penalise the conman! It is equal to all, so to say!
Even genuine funds in sovereign care are misappropriated in connivance with the crooked. The Nagarwala case, in which the Chief General Manager of the State Bank of India, Parliament Street, New Delhi, was suspected of removing Rs. 60 lakhs from the bank’s vault, remained unsolved, as Nagarwala died before action could be completed. There are many instances when the funds in the custody of the Life Insurance Corporation of India were misemployed to rescue some business or corporate on the bourses. How much loss was suffered by the insured in such operations was never known. Such activities indicate to only one thing: the economic and financial jargon is employed in full measure to guile the gullible and benefit the swindler. That seems to be rule of the financial markets. The poor do not understand the financial jargon, trust the written word in documents and approvals of the government. And that is where he makes the tragic mistake of parting with his hard earned money. In the promised 4 or 5 years, when his money promised to double or quadruple, the promoters would have wound up all the operations and moved to unknown addresses. The depositor or investor too would have transferred residence from place to place on business and lost touch with the company. Such negligence always proves costly. There is no magic formula to double or quadruple money in 4 or 5 years. It is all deceit, conning and cheating. The ideal and safest is term deposit with public sector banks, because the money is safe with them. The interest rates may sound low in comparison to the advertised high rates of con companies, whose life itself may not be more than a few months. The advantages are always in favour of the public sector banks, for they are still governed by the law and are administered in a transparent manner, so far as the small depositor is concerned.
The business of Chit Funds and lotteries must be banned immediately in public interest. Government cannot encourage rogue individuals and con companies to suck the poor people under the excuse: investor beware. It is the primary expectation of the citizen that the government will not allow any conning to be done and punish those indulging in such unlawful activities. It is unfortunate that governments run lotteries. It is unfortunate that chit Funds operate in India. There are no centralised data on the amount of money chit fund companies have collected in India. I am aware of this nefarious activity going on for several decades. When I was still a student, I along with another friend of mine, caught hold of the chief of a Chit Fund company as he was preparing to run away with a heavy collection from the poor people and handed him over to the police with the help of the local MLA, in Karauli in Rajasthan in early 1960s. This company was called the Zandu Finance & Chit Fund Company. Since then, several instances of criminal cheating by these companies were exposed by the press. As will be noticed, both the Press and the politician had not yet turned vicious till then; values meant everything in those days and public good was the ideal pursued by everyone. The decline of values started in India after the imposition of the Emergency; it has only aggravated thereafter!
The matter is under the consideration of the government of India since more than 2 decades. The chit fund companies are having a field day. They are in a business that needs to be banned. Government must not delay the decision any more.