KOCHI/PATHANAMTHITTA: Shibu George, who worked in Muscat, Oman, for 20 years before returning to India, had put his entire savings in Popular Finance Group, the Konni-based group which went belly up recently. George, 48, who is originally from Pathanamthitta but is now settled in Bengaluru, deposited his savings of Rs 40 lakh in Popular Finance’s Mathikere branch near Bengaluru. “Over 90 per cent of the depositors in the Mathikere branch are Malayalis. We have filed a complaint at SN Pura station,” he said.
“I had saved the money for my children’s education. Now, I have lost everything,” he said. At the Mathikere branch alone, about 150 investors have lost their money. George is not the only one. There are at least 20,000 investors of Popular Finance in Kerala and in cities such as Mumbai, Delhi and Bengaluru who have been duped by the group. Some investors from Mumbai had landed in Pathanamthitta, braving Covid-19 restrictions hoping against hope that they could get their money back if they could see someone at the company’s head office. What they saw instead were locked-up offices and protests outside by investors who, like them, had lost their money.
Founded by one T K Daniel in 1965 in Konni, Popular Finance began as a chit fund company and was later registered as an NBFC. Over the years, it spread across the country, mostly in Kerala, Karnataka and Maharashtra. What lured gullible investors to the deposit scheme was the 12 per cent interest rate offered by the group.
Almost all the deposits were accepted in cheques, which gave the scheme much-needed credibility. Another factor was the group’s 55-year track record, during which the company never showed any signs of defaults -- that is, until this August when it first started delaying interest payments, and later collapsed.
What’s perplexing is the fact that even the branch managers or senior executives were not aware of any signs of impending weakness until the last moment. “If we had any inkling, we would have shifted the money fast. But, none of the senior managers or officials were aware of what was coming,” said a depositor, whose mother-in-law was the manager in one of the branches in Pathanamthitta. “She convinced all her family members and relatives to put the money in the branch, totalling Rs 2 crore. Now, it seems the entire money is lost,” he said. The branch alone had deposits worth Rs 15-20 crore, he said.
Manoj V George, the counsel representing Popular Group Investors Association, Kerala, said the group employed retired bank managers or persons highly regarded in the church circles, giving the entire deposit mobilisation plan a huge dose of credibility. “No one doubted anything as the senior officers were all known to them,” he said.
He said the state government had failed in its duty to stop and seize all the deposits of Popular Finance as the entire operation became illegal after the government last year passed the Banning of Unregulated Deposit Schemes Act, 2019. The Act aimed to protect investors from fraudulent investment schemes, such as Ponzi schemes. “All state governments were entrusted with the duty to take over the assets and deposits. A committee should be formed with a secretary in charge to initiate the process. Till this date, no committee has been formed by Kerala,” said Manoj.
The investors are also not amused by the state government’s move to transfer all cases to the Konni police station, despite the fact that the branches are spread across the country..In the coming days, the police team will travel to other states as part of the probe. District SP K G Simon said the visit would be undertaken immediately after the court gives permission for the police custody of the group’s managing director and other directors. (With inputs from P T Mohanan Pillai)
left in lurch
There are at least 20,000 investors of Popular Finance in Kerala and in cities such as Mumbai, Delhi and Bengaluru who have been duped by the group