The primary responsibility for regulating chit funds lies with state governments. The record of West Bengal's Trinamool government is worse than most. It is only after the collapse that it has called a special session of the West Bengal Assembly to pass a Bill to prevent the likes of Saradha from being in business. This is after not pursuing the Bill sent to the Centre for its assent in 2009, when the Left Front was in power, and withdrawing it last year to write its own Bill. Meanwhile, important leaders of the party have openly associated themselves with the group, creating the impression that it had the full backing of the state government. Senior Trinamool leader and the state's transport minister, Madan Mitra, openly patronised the group; and it was not till late last week that the party's Rajya Sabha member Kunal Ghosh, Saradha's CEO for media operations, offered in a letter to party leader Mamata Banerjee to resign from Parliament. The Trinamool Congress will likely pay a heavy political price for the widespread suffering it has caused by its naïve, cavalier and self-serving support to unscrupulous deposit takers.
The long-lived Sahara group exemplifies the modus operandi of such businesses, which are usually masters of regulator shopping and legalistic delays. When this is known and when the regulators have been reduced to merely issuing notices that are disregarded with impunity, a unified authority to tackle the menace should have come into existence long ago. This is primarily the Centre's responsibility. Of course, the lack of financial inclusion encourages people to look with favour on such schemes, especially as they are hard-sold by agents who gain high commissions that regular banks cannot, naturally, match. It is also unquestionably difficult to regulate the human greed that seizes on the offer of outsize returns; but clearly problematic operators should not be allowed to grow as large as Saradha did.