West Bengal : The chit fund crisis: looting the poor with political connivance

April 23, 2013

by Partho Sarathi Ray

The collapse of the chit fund company, Saradha group, is having major repercussions all over Bengal. Over the last two days, thousands of their depositors and agents have been staging protests in front of their offices all over the state, and many of the offices and real estate properties have been attacked and destroyed by desperate agents. Roads have been blocked in many places and there have been pitched battles with the police. Then the protests had moved to the home of the chief minister Mamata Banerjee, considered to be one of the major patrons of the company, where they were lathicharged and around 45 arrested. Then they protested in front of the Trinamool Congress headquarters but have been removed from there too. The agents are in dire conditions as they cannot even go back to their localities as the depositors who have lost their money are waiting there for them. Two agents have already committed suicide, in Diamond Harbour and Durgapur, and heart-rending scenes of devastated depositors are being witnessed everywhere.

The chit fund business, which has been going on for the last decade, has shown a phenomenal increase over the last two years, the total number going up from 65 to 135 during this period. These are all owned by small-time Bengali enterpreuners, who started in the real estate business, and then moved to the chit fund business with direct political links helping them in the process. Many of them had connections with the CPI(M) when the Left Front was in power (the nephew of Amitava Nandi, an influential party leader from North 24 Parganas is the owner of one), but ever since the TMC came to power, their influence and reach have increased exponentially. The close ties of these businesses with the ruling TMC, starting from Mamata Banerjee onwards, have allowed them to expand their business phenomenally and flout every financial norm and regulation. Among these, the three major were Saradha group, Rose Valley and MPS. The money they gained in the chit fund business was pumped into all types of other businesses such as real estate, hotels and media.

The Saradha group, owned by Sudipta Sen who has now disappeared after writing a 18 page letter to the CBI accusing many leaders of the TMC and the Congress of being in his payroll, apparently has bought thousands of acres of land all over Bengal, with the help of local TMC leaders. One of their major real estate development sites, off Diamond Harbour road in South 24 Parganas, reportedly was a recreational centre for political leaders, business tycoons and media barons. Their media business, consisting of Bengali, Hindi and Urdu newspapers and three TV channels were consistent and vocal supporters of the TMC and the government. Among the seven newspapers, which the Mamata government ordered public libraries in West Bengal to subscribe to, four belonged to the Saradha group. The chief editor of their Bengali newspaper, and the main public face of the group, Kunal Ghosh was made into a Rajya Sabha MP by the TMC. Today, he is claiming that he was “only a salaried employee” of the company. These newspapers, and the TV channel Channel 10, constantly vilified all opponents against the government and made baseless accusations against many of them. Shatabdi Roy, another TMC MP, was the brand ambassador of the group. Madan Mitra, the transport and sports minister, is the leader of the employees union. Mamata herself inaugarated their Urdu daily Kalam in a glittering function. Sudipta Sen was a major buyer of Mamata’s paintings, the last one was bought for Rs 1 crore 86 lakhs. Today Mamata Banerjee and the TMC is desperate to show their distance from the Saradha group but in the peoples’ eyes they are closely identified with them. And this had allowed the company also to leverage their proximity to the ruling party to gain peoples’ trust and draw more investment into their chit fund scheme. Also, at least three letters from the PMO to the West Bengal government over the last one year, asking for the government to check the activities of the Saradha group, were disregarded, allowing them a free hand to go about their business. A bill passed by the West Bengal assembly during the Left Front rule to regulate the activities of the chit funds is languishing for presidential assent for the last three years. All these shows the extent of the connivance of this upcoming bourgeois class with the ruling party and its leaders, and the way the government has been subservient to their interests. There are even whisperings that the meetings between the representatives of the CPI(Maoist) and the government interlocutors were held in the resort owned by one such company on the outskirts of Jhargram.

The activities of these chit funds have also adversely affected the government small savings schemes, such as the post-office based schemes, where the government has also cut down the interest rates and where the investment has gone down from Rs 12000 crore two years back to Rs 1500 crore only, whereas companies such as Saradha has seen investment of Rs 22000 crore in the same period, all of which has now disappeared ruining 2.5 lakh investors in the process.

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