VIJAYAWADA: Observing that Margadarsi Chit Fund Private Limited (MCPL) had committed several violations like collecting security deposits, diversion of funds, improper maintenance of records, maintaining balance sheet as per the Company Act instead of the Chit Fund Act, Registration and Stamps Department Inspector General (IG) V Ramakrishna on Monday said showcause notices will be served on Margadarsi as well as other chit fund firms in seven to 10 working days seeking explanation on the violations identified during the inspections within a fortnight.
Revealing that as many as 18 units of MCPL were inspected on November 15, he said non-cooperation of the foremen (branch head/manager) and their staff was noticed during the searches. Large scale violations and irregularities were unearthed. The foremen don’t have any control of chit accounts and no knowledge of the bank accounts and affairs of the chit business happening in branches.
“Because of the non-cooperation from them, we took almost three days for inspection. But we could not gather major information. We only collected certain information available there,” he said, adding that the staff of MCPL even refused to sign the documents they gathered.
“For every query, they are answering that they don’t have information and all the information, including the bank accounts are with the head office, which is not in Andhra Pradesh,” the IG said.Speaking to mediapersons at the Secretariat on Monday, the IG said the MCPL did not file the statutory documents after State bifurcation.
He informed that his team will also verify the records in MCPL headquarters in Hyderabad after seeking permission from his Telangana counterpart. A detailed audit (forensic audit) will also be ordered to verify the accounts and stringent due diligence will be applied before calling for new chits henceforth.
Pointing out how interest is payable on security amount, he said there was no reply from the MCPL on where the security money was parked and no information how the money is being utilised. Branch-wise security details should be given and deposited in the respective branches. These steps are intended to secure public money. As per the balance sheet, it was observed that MCPL never filed the balance sheet and profit and loss accounts after the State bifurcation, the IG said.