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Chit Fund Collapse: Mamata Forms SIT

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Breaking her silence over the collapse of the chit fund company, Saradha Group, which has hit thousands of depositors across the state in the last few days, West Bengal Chief Minister Mamata Banerjee on Monday, 22 April 2013 set up a high-level inquiry and deputed a special investigation team into it.

Banerjee told reporters after a high-level meeting that a SIT under the DGP would go into the fiasco and a high-level inquiry under the Commission of Inquiry Act was being instituted.

The chief minister also said that a draft for promulgating an ordinance having more teeth to restrict operations of chit fund companies was prepared.

She said that she had telephonically requested President Pranab Mukherjee to see that the bill passed by previous Left Front government seeking to restrict chit-fund operations, was returned to enable the state government to incorporate more stringent provisions to deal with such illegal activities.

"If the bill forwarded by the Left Front government to the Centre in 2009, is returned within 24 hours, then our government will immediately promulgate the ordinance to that effect," the chief minister said.

"Laws that the Left Front government had proposed, had some flaws in it and the chit-fund business mushroomed during the Left regime," she alleged.

Stating that strong laws were needed to curb the illegal activities of chitfunds, Banerjee said since their operations were governed by central laws and not by the state government, "the onus lies with the central government."

Expressing concern at the situation, she said "for quite a few years, some chitfunds were deceiving poor investors promising high returns. This has been continuing since the '80s in this state."

The Mystery Deepens
A state government official told The Telegraph ( Court Takes oN Deposit Firms ) that there were doubts that the Saradha group CEO Sudipto Sen could also the managing director of another company called Sanchayani Savings and Investment (India) Limited which had collapsed in the 1990s.

He said there was confusion regarding the name of Sen’s father though all other indicators said he owned both companies. While Saradha Realty India Limited documents named Sen’s father as Nripendra Narayan Sen, those of Sanchayani Savings say it was Bhudeb Chandra Sen. “But the email ID of both companies is the same — Since it is not possible for two separate companies to have the same email ID, there must be something fishy going on and needs thorough investigation.”

There are rumours that Sen belongs to the family of Bhudeb Sen, the founder of the Calcutta-based Sanchayani Savings and Investment Company that had defaulted on payments to thousands of depositors in the early 1990s. Bhudeb was eventually arrested in 1994 and the RBI later ordered the company not to accept deposits from the public. According to unconfirmed reports, Sudipto Sen later registered another company under the name of Sanchayani Savings and Investment (India) Limited with a Bihar address.

Sen has, however, reportedly always tried to rubbish his alleged ties with Bhudeb Sen’s family, probably fearing a trust deficit that could harm his own deposit collecting ventures. This was probably another reason why his PAN card and Saradha Group documents listed his father’s name as Nripendra Narayan Sen.

“There is also confusion about the correct spelling of his name because in some documents it appears as Sudipto while in others it is Sudipta,” the source added.

(PTI with inputs from The Telegraph)