Vundavalli welcomes inspection on chit fund firms

Vijayawada: Former Congress MP Vundavalli Aruna Kumar has welcomed the state-wide swoop on chit fund companies including the Margadarsi chit fund by inspection teams of the department of Registration and Stamps on Tuesday.

The inspections followed complaints these firms were resorting to a series of financial irregularities.

The ex-MP said, “I am eagerly waiting for the hearing in the Supreme Court on Dec. 2 on my petition filed against the Margadarsi Financiers for collection of deposits from the people and diverting such funds for other purposes in violation of norms of the RBI Act. I am also facing a case filed by the Margadarsi chit fund company claiming defamation and damages of Rs 50 lakh for my statement that the company is headed by Ch. Ramoji Rao, even though the firm denies his role in its functioning.”

The main contention of the ex-MP is that the Margadarsi Financiers is a Hindu Undivided Family entity and is not permitted to collect deposits from the general public and divert such funds for other purposes to promote varied business activities as per norms of RBI Act, Income Tax Act and also AP Protection of Depositors of Financial Establishments Act.

The former MP had filed a petition in the AP high court in 2006 alleging financial irregularities by the Margadarsi Financiers, and saying it was a Hindu Undivided Family concern promoted by Ch. Ramoji Rao and that it was collecting deposits from the people and diverting them for other purposes.

He alleged that the company had mobilised deposits from the subscribers worth Rs 2,600 crore. The case was dismissed by the high court in 2014. He filed a special leave petition in the Supreme Court in 2020, challenging AP high court’s verdict. The AP government was also proceeded against in the case. He had also sought a probe by enforcement directorate or CBI into the chit funds scam.