Telangana: Illegal chit funds flourish

Hyderabad: Though the operation of private financial services and chit funds is prohibited, they are still being run illegally. If an individual, or a company, wishes to set up a chit fund, he must be registered with the Reserve Bank of India and compliant with its norms.

As per the Chit Fund Act, a person wishing to start a chit fund is supposed to register his business with the Regi-strar of Companies (ROC), deposit the face value amount in the bank, and surrender it to the government. This has been made mandatory so that in case the business-owner shuts the shop, the gover-nment can release the deposited amount to chit members.

The organisers of chit funds are supposed to file their returns every quarter. The minutes of the chit meetings are supposed to be recorded and submitted to the concerned authorities. 

Illegal operators res-ort to unfair means. A majority of them charge exorbitant interest rates. They do not pay taxes and they do not have any official expenses.

A chit fund organiser, on condition of anonymity, said, “In illegal chits which are run by individuals or partners, there is nothing but profit. Unless a case is filed with the police, no one can question the organisers or put an end to their business.”

He said that several registered firms were actually running several more beyond permitted numbers unofficially. 

Police up vigil on defaulters
The atrocities of illegal chit fund organisers in and around Malkajgiri are increasing by the day. Victims have begun seeking help from the authorities, as a result of which the police has increased their vigilance.

The Rachakonda police recently arrested 10 illegal financiers. They found that most of them were people who had sold their lands and invested the money into the illegal business.  

Cops say that they are keeping tabs on persons suspected to be involved in the business and collecting evidence against them. More arrests are likely to be made .