Raids held at 18 units of chit-fund firms in Andhra
VIJAYAWADA: Officials of the Stamps and Registration Department inspected units of various chit fund companies across the State on Tuesday after receiving complaints of malpractice and violation of the Reserve Bank of India (RBI) Act and the Chit Funds Act.
Searches were conducted at 18 units of the chit fund firms to identify malpractice, serious lapses on part of the foremen of the companies.Raids on chit fund firms have been carried out for the third time since October. It may be recalled that searches were conducted on October 21 at 12 firms and on October 31 at five companies.
After preliminary scrutiny of the firms’ balance sheets for 2021-22, officials observed trends of diversion of funds.They found that the companies had collected advance subscription for which the company paid 5% interest on the amount collected. As per law, if the foreman is the prized subscriber, he shall give security for due repayment. However, the companies under scanner had not been giving security, violating Section 31 of The Chit Funds Act.
The officials also found that the firms were not paying GST on penalties collected from subscribers for late payment.All deputy registrar of chit funds in the State were directed to take necessary action, including penal action, on the noticed irregularities and submit compliance.