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The state government will notify its investor protection law within next 2-3 days to fast track chit fund cases and return money to the duped investors.
The Odisha Protection of Interests of Depositors (in Financial Establishment) -2011 Act, which received the assent of the President of India on August 13, this year, empowers the state government to initiate punitive action against the offenders.
The new law has provisions for establishment of special courts where the chit fund fraud cases will be tried. The court would take decision about auctioning the property of the defaulted companies and issue guidelines about distributing the receipt among the investors.
The government has already framed rules as per the law and taken decision to establish four designated courts at Bhubaneswar, Balasore, Sambalpur and Berhampur. The rules have received the Chief Minister's nod and a notification will be issued soon.
“We have taken a decision to establish four designated courts where all the chit fund cases will be tried. The newly enacted law would ensure fast trial of these cases,” said Prasanna Acharya, state finance minister. The new law has provisions that if the chit fund promoters are found guilty, they could be jailed for a maximum period of 10 years.
Though the state government had launched a crackdown on chit fund companies including big names like Saradha Group, Seashore and Artha Tatwa, accused of duping public of crores of rupees, it was unable to take stern action against the companies, pending enactment of the new law.
As per the government estimates, about 650,000 people have been duped to the tune of Rs 4375 crore between January 2012 and June 2013, by the chit fund companies in the state. The state police and crime branch have taken action against 127 firms, filed 280 cases and arrested more than 300 persons for involvement in the illegal money making schemes.
To probe the multi-crore scam, the state government has constituted an enquiry commission headed by retired Chief Justice of Sikkim High Court RK Patra. A corpus fund of Rs 300 crore was also announced to give relief to the genuine small investors who have lost their money in the scam.
