The West Bengal government of Mamata Banerjee has written in sweeping powers to search and seize offices and homes of defaulting chit fund promoters as well as their employees in the bill cleared by the state assembly on Thursday.
The bill also allows for part payment from the proceeds to the depositors in the chit funds. It does not mention explicitly if the government can take over the financial liability of the funds to make good the money for the depositors in these funds as it has done in the Saradha case but keeps the possibility open.
The West Bengal Protection of Interests of Depositors in Financial Establishments Bill 2013 steered by finance minister Amit Mitra through the state assembly is,however,still not a finished article as the Centre has yet to approve all the provisions.
Mitra,however,claimed he has narrowed the differences with the Centre from the original eight but did not specify where those still remained. The earlier bill cleared in April this year by the state ran up against opposition from the Centre due to its summary clauses.
While the state is afflicted with a high incidence of Ponzi schemes whose collapse has created law-and-order problems,it also runs the highest fiscal deficit in the country. Still chief minister Mamata Banerjee has announced a Rs 500 crore bailout package for the depositors to the Saradha scheme whose collapse has also created a political storm for her Trinamool Congress.
For the first tranche of Rs 50 crore Mitra cut into non-plan expenditure of the home department to finance it. The CM has asked every department to divert a part of their non-plan expenditure to help in forming the corpus,a finance department official said.
The new bill says the state machinery will move in within 30 days after the competent authority issues orders for winding up a fraud scheme. Depositors and lenders must inform the state of their demands within 60 days of the announcement. Borrowers from the scheme can also be proceeded against.
The state government has announced it will compensate 18 lakh depositors who have been identified as having lost money in the scam. The sum committed so far is Rs 123 crore. The state treasury has issued 1.06 lakh cheques and plans to issue another 1.66 lakh cheques but according to the official a third of these,about 40,000 has been returned as non-traceable.
Many people in whose names cheques have been issued are found to be non-existent, the official said.
The government had kept a target of disbursing 5 lakh cheques before Diwali,with Mamata on September 30 doling out Rs 50 crore to 929 depositors.
The Opposition leader Surya Kanta Mishra has alleged that spending of government money to compensate depositors is itself illegal.