"We have given the case to Crime Branch for investigating the role of NGOs," Omar said in the Legislative Council during question hour.
He said several NGOs allegedly took the students of the state for a ride as the state government had no role in the implementation of the scheme.
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The Chief Minister said some colleges are trying to cash in on the scheme by admitting students in excess of the cap -- in some cases as high as 40 students were admitted in one college.
Omar said he has taken up the matter with Prime Minister Manmohan Singh, seeking a supervisory role for the state government in the implementation of the scheme.
"I have written a letter to the Prime Minister in this regard. I have sought a one time exemption for students admitted in excess of the cap," he added.
"We also appeal the students to seek admission directly in the colleges instead of going through NGOs. They should also verify if the college has exceeded the cap of five admissions per college for the students of the state under the scheme set by the Union HRD Ministry," he said.
Many students, who had taken admission under the Prime Minister's Scholarship Scheme, have alleged that they were asked to submit full fees or else their admissions will be cancelled.
As per the PMSSS scheme, students were to pay Rs 25,000 each and the college would provide the tuition fees, boarding and lodging fees to the students who enrolled themselves in various professional and technical colleges, recognised by the government of India. In addition to this, books too would be provided for at the cost of the government.