VIJAYAWADA:The Andhra Pradesh government is likely to order the winding up of operations of the Margadarsi Chit Fund Pvt Ltd in the state following the detection of a series of violations like diversion of funds and investing them in speculative markets.
CID additional director general N. Sanjay and Registration & Stamps Department inspector general V. Ramakrishna told the media here on Monday that the recent searches on the entity’s branches showed there was no security to the deposits made by the chit subscribers.
“The foremen functioning as branch managers had no role to play except to forward the subscribers’ sums to the company’s head office in Hyderabad, Telangana state,” Sanjay said.
The senior official added, “Based on prima facie evidence, we noticed that the chit firm resorted to a series of violations. Hence, the need for a thorough probe to safeguard the interests of the subscribers.”
He said the Registration & Stamps Department’s assistant registrar was the authority to keep tabs on the chit fund business in his/her jurisdiction while the chit foremen or branch managers should protect the deposited amount from being diverted for other purposes.
“The firm’s branch managers were given power to issue cheques of upto `500 only. They have no clue where the deposited amounts were being diverted by the company’s corporate office,” Sanjay said.
Ramakrishna said, “In view of the serious rule violations, we may initiate proceedings to wind up operations of the Margadarsi for the various violations including acts like it investing such amounts in associated firms for personal gain."
He said that searches had been carried out in 37 chit fund companies in the state in October and November last. Among these were 17 offices of the Margadarsi. “We noticed grave violations with regard to Margadarsi.”
He said that Margadarsi filed writ petitions in the high courts of both AP and Telangana. “When we obtained the financial statements and balance sheets of the firm and got them analysed with a qualified chartered accountant, we came to know about a series of violations of norms,” he said.
Meanwhile, in the last two days, eight complaints were received from registration officials against the Margadarsi, alleging that the company resorted to financial fraud. A few branch managers were arrested. These included G. Venkata Ramaprasad from Visakhapatnam, Sati Ravishakar from Rajamahendravaram, Bandaru Srinivasa Rao from Vijayawada and Gorijavolu Sivaramakrishna from Guntur.
