VIJAYAWADA: The Andhra Pradesh government would conduct a detailed audit on all 37 branches of the Margadarsi Chit Funds Pvt Ltd under Section 61 (4) of the Chit Funds Act, 1982.
A chit auditor has been appointed under Section 61 (2) of the Act, to take the matter forward.
In a statement from the office of the commissioner and inspector general of registration and stamps here on Friday, the commissioner said the preliminary report of the qualified chartered accountant made it clear that MCFPL committed large-scale violations. “Hence, there was a need for a detailed audit report to unearth the irregularities committed by the company.”
The qualified auditor came up with findings in the audit as per financial statements and accordingly, an amount of ₹ 459.98 crore was invested in mutual funds, government securities and equity instruments including subsidiaries and associates.
The company disclosed a list of three subsidiaries including Margadarsi Chits Pvt Ltd Chennai; Margadarsi Chits (Karnataka) Pvt Ltd, Bengaluru and Ushakiron Media Pvt Ltd, Hyderabad.
As per the list of shareholders, in Ushakiron Media Pvt Ltd alone, the company invested a share capital of ₹ 2 crores, amounting to 88.5 per cent of the paid-up capital. The company was not engaged in chit fund business and it was carrying on other businesses through the subsidiary.
The auditor, as per bank statements, noticed that the onward transfers into mutual funds and fixed deposits took place. For example, ₹ 29 crores were transferred to ICICI Prudential Mutual Fund on April 9, 2021, from the current account of No. 347701010023032 of Union Bank of India, Ramkote Branch in Hyderabad.
The sources of this transfer were the funds received from the branches.
Based on such findings, it was observed that MCFPL had been diverting the subscribers’ money for its personal gains and was committing offences under various provisions of law. It was placing the hard-earned money of the gullible subscribers at risk.
Assistant registrars of chits from Visakhapatnam, Kakinada, Eluru, Vijayawada, Guntur, Palnadu, Kurnool and Anantapur lodged complaints with the CID for further investigation.
