At least 60 fraudulent firms like Saradha Group, which is embroiled in the West Bengal chit fund scanal, are actively operating in the state and may have amassed around Rs.10 lakh crore from unsuspecting depositors, say people in the know.
Further, there are "countless" small and unregistered shady money laundering firms operating in the state, especially in North and South 24 Parganas, Malda and Birbhum districts, according to experts.
Widespread protests had been reported across West Bengal as irate depositors and agents of the Saradha Group, which has gone bust, hit the streets and attacked many of the firm's offices. There were incidents of clashes between the agents and the depositors who demanded their money back. There were also unconfirmed reports of an agent committing suicide.
Lured by the promise of high interest rates - ranging from 25 percent to 30 percent - lakhs of depositors, mostly poor people in the state's villages and small towns, had deposited their hard-earned money with the company. The group is alleged to have siphoned off investors' money worth Rs.17,000 crore.
Shamik Dasgupta, former general manager of the Calcutta Stock Exchange, said that most of the fraudulent companies like Saradha are violating provisions of the Companies act to misuse public money.
"These companies are not chit funds. They are formed under Companies Act, 1956, and are registered with the ministry of corporate affairs," Dasgupta told IANS.
He said more than 60 firms like Saradha were actively operating in Bengal.
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On the total amount of depositors' money which they might have siphoned off, he said: "We came to know that Saradha Group alone could have mopped up over Rs.17,000 crore. So, the total amount amassed by such companies could be about Rs.10 lakh crore."
Mala Banerjee, president, Federation of Consumer Associations of West Bengal, said there were "countless" small and unregistered shady firms in the state.
"We got an unconfirmed report that only in South 24 Parganas there are more than 50 fraudulent companies, which are small and unregistered. Other districts where such companies are operating include North 24 Parganas, Malda and Birbhum," Banerjee said.
Responding to queries in the Lok Sabha last month, Minister of State for Corporate Affairs Sachin Pilot had said that the government has received complaints against 64 firms, besides nine Saradha Group companies, for indulging in ponzi or multi-level marketing (MLM) schemes in West Bengal.
Fraudulent companies raise money from investors for various ponzi schemes. The investment plans include daily or monthly instalments and lump sum investment.
Pilot said that besides floating ponzi or money circulation schemes under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, unscrupulous firms cheat investors in various other ways.
According to the minister, such fraudulent means include: "vanishing" after raising money through public offers; illegal collection of deposits in violation of the Companies act; floating sham collective investment schemes (CIS) in violation of SEBI (Securities and Exchange Board of India) act; and collecting money from public by posing as Non-Banking Financial Companies (NBFCs) in violation of the RBI (Reserve Bank of India) act.