HYDERABAD: The state CID has arrested four foremen of M/s Margadarsi Chit Funds Pvt Ltd during searches in seven of its branches, citing violation of norms, officials reported on Sunday.
The arrested four were Kamineni Ramakrishna of Visakhapatnam branch, Satti Ravishankar of Rajahmundry branch, B Srinivasa Rao of Vijayawada (Labbipet) and Gorijavolu Sivaramakrishna of Guntur branch. “They are being produced before courts for Judicial remand,” officials said.
According to the CID, complaints were received from the Assistant Registrar of Chits against M/s Margadarsi Chit Funds and their authorised foremen of branches at Visakhapatnam (Seethammadhara); Rajahmundry, Eluru, Vijayawada (Labbipet), Guntur, Narasaraopeta and Anantapur. FIRs were registered.
Searches were held at seven units of the chit fund and the staff was examined. The officials said they detected non–payment of subscription amount(s) into the chit accounts, which the firm, MCFPL, is supposed to pay on par with the payment from the subscribers in each chit.
“The MCFPL is subscribing for a minimum of one ticket to a maximum of 50 per cent of the tickets on the date it obtained the certificate of commencement of the chit. Later, the tickets in excess of one are replaced with new subscribers. However, in neither of the situations, MCFPL is paying the chit subscription, though (as per rule) this has to be paid by it on par with other subscribers.”
“This was accompanied by non-maintenance of the statutory ledgers. There are no credit entries for the amounts E-paid by MCFPL into Account No 1 (as deposed by the authorised foreman).”
The CID also found that there was no proof of payment of chit subscription towards one mandatory ticket subscribed by MCFPL. “Vacant chit tickets were shown as ‘subscribed’ by MCFPL and chit tickets of defaulted subscribers till replacement of these tickets through other new subscribers by way of assignment of chit ticket.”
“The deficit amount is managed by way a juggling with the amount received from one or more chit groups’ subscribers to pay the prized subscriber of another chit group. Thus, the foreman is not paying the chit subscription as stipulated under Section 27 and Section 32, Chit Fund Act,” the officials claimed.
Further violations in the maintenance of bank accounts by MCFPL to mask the fraudulent activities including illegal diversion of funds for other investments were found during searches, the officials said.
The officials found remote control by the corporate headquarters on the bank accounts of the branches. Further, there was the illegal deposit scheme, like a business style of an NBFC, but without the statutory approval of RBI.
