Chit fund scam: Ask people to deposit money in banks, post offices, RBI tells Orissa govt

At least a million families, mostly belonging to the low-income group, have been affected by the scam in Orissa.

As a nine-member Special Investigation Team (SIT) of the CBI investigates the multi-crore chit fund scam in Orissa, West Bengal and Tripura following an SC direction, the Reserve Bank of India (RBI) has impressed on the need to sensitise people on the suspicious activities of multi-state cooperative societies, which don’t come under its ambit, in Orissa.

After the CBI took over the probe last month, the SIT led by its joint director Rajeev Singh had started its probe in Orissa where the scale of the scam was found to be much larger (chit fund firms collected around Rs 4,600 crore in Orissa as compared to Rs 2,460 crore in West Bengal). Now, in a letter to the finance department, the RBI has suggested that the Orissa government raise awareness among people through print, TV and radio that they should deposit their money with banks or post offices only.

The RBI said that it had information that multi-state cooperative societies such as Micro Finance Credit Co-op society, Sammruddha Jeevan Multistate Multi-purpose Cooperative Society, PICL Multistate Multi-purpose Cooperative Society and Sahara Credit Cooperative Society, were still operating and accepting deposists from a large number of people in Orissa.

The problem with this, the RBI pointed out, was that since these societies are registered under the Ministry of Agriculture and Cooperation, they take advantage of the fact that they are not under the regulatory control of the RBI, SEBI or Ministry of Corporate Affairs. The RBI suggested that the state take action against these societies as per the provisions of the Odisha Protection of Interests of Depositors Act, 2011.

Incidentally, in March, the Orissa CID had arrested the director of Micro Finance company (a chit fund firm registered as a non-deposit taking NBFC) and a government official, over two dubious letters directing district collectors to help the company resume operations. While the premises of the company was sealed by the CID’s Economic Offences Wing in 2012, a letter written by the personal assistant to the panchayatiraj department secretary in 2013, purpotedly asked all district collectors to take steps for “smooth running of the closed branches of Micro Finance Limited all over Orissa due to the chit fund scam”.

Senior officials of the finance department are now mulling a comprehensive roadmap for financial inclusion in the state, which will be discussed by a core team consisting the finance secretary, panchayatiraj secretary, regional directors of RBI, NABARD CGM, SBI CGM, convenor of SLBC and other officials. At least a million families, mostly belonging to the low-income group, have been affected by the scam in Orissa.

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