Chit companies in Bengal try to save face

Published: 14th May 2013 08:17 AM  |   Last Updated: 14th May 2013 08:17 AM   |  A+A-

After the Saradha Group scam left thousands of small depositors and agents in trouble, other companies in the state, which have come under the scanner of government agencies, are trying hard to distance itself from the scam.

Companies such as Rose Valley, MPS, Prayag, Ramel and ICore have resorted to television and print campaigns to clarify its stance. After Sudipta Sen’s Saradha Group defaulted on returns, widespread panic has gripped depositors in West Bengal. At least 10 people have committed suicide while one agent was brutally murdered in the state in the last couple of weeks.

The Rose Valley Group, for instance, is running advertorial campaigns on leading regional news channels and newspapers asking its investors to keep their faith in the company.

“We want to reach out to the people to spread the message that we are not a chit fund company. We deal with legitimate business model and are one of the largest timeshare companies,” said an official who handles the public relations of Rose Valley Group.

The official explained that through ‘timeshare’ the company sold hotel bookings which, if not availed by a certain time, would be returned with interest to the investor. The group is embroiled in a legal battle with market regulator, Securities and Exchange Board of India (SEBI) over one of its schemes called ‘Aashirvad’. The company has rejected SEBI’s allegation that ‘Aashirvad’ was a Collective Investment Scheme (CIS) but has discontinued it since 2011.

A similar SEBI order against the MPS Group was stayed by the Court. 

“In the last 17 years, not a single person got duped by us and never will be. We are appealing (to) every sensible person not to spread panic or mislead the mass,” said Shibamoy Dutta, Managing Director, Rose Valley, in one of its advertisements. Other companies too have ramped up its public relations.

There are at least 72 chit fund companies currently operating in West Bengal. Even though a number of these companies vehemently claim that chit fund business is legal, they have moved away from earlier chit fund models and have resorted to other kinds of ‘ponzi’ schemes, say government sources.

Karat accuses TMC

CPM general secretary Prakash Karat on Monday alleged that top leaders of the Trinamool Congress are closely associated with the Saradha group, involved in the recent chit fund scam.

He said that a CBI probe into the entire scam is the only way out as several other states like Assam, Jharkhand and Tripura are also affected by the group’s activities.

“This party has been closely working with this group of companies and using its media for its political purposes. Everyone knows about the involvement of its top leaders and MPs with the Saradha group.” He demanded a new law to regulate the non-banking financial companies and chit funds.


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