New Delhi, April 29 (IANS) The All India Association of Chit Funds Monday urged the government and the media not to associate Saradha group of West Bengal with the chit fund sector, as the company was not registered as a chit fund and had business in various other sectors.
"We have verified with the office of 'Registrars of Chit Funds' in Kolkata that Saradha is not registered. The company had varied business interests and what is quite glaring is that they did not float any chit fund company. Yet, their failure is attributed to chit funds," said T.S. Sivaramakrishnan, general secretary, All India Association of Chit Funds.
The association claimed that the chit fund sector was being made a "scapegoat" by the government, who are feeling the public pressure following the scam involving Saradha in West Bengal.
Sivaramakrishnan said chit fund companies, unlike Saradha, are not allowed to accept deposits or allowed to carry on any other businesses without permission of the registrar or from the state government, which as of now had not been given.
Stating that registered chit funds companies are being "irresponsibly" maligned by the media without having proper understanding of the sector, Sivaramakrishnan said this may create panic among the citizens who may have invested in the sector, and put a multi-crore-rupee industry at stake.
According to the association, there are as many as 10,000 registered chit fund companies across the country, with an annual turnover of Rs.30,000 crore.
"Chit funds are perfectly legal, governed by Chit Fund Act, 1982," and administered by the state governments. Even the Bill and Melinda Gates Foundation have chosen this channel for their poverty alleviation programme in the country," he said.
Acknowledging that there are hundreds of fraudulent companies in the country, Sivaramakrishnan said the threat can only be countered by effective coordination between the investigative, law enforcement and regulatory authorities in the country.
The Association joint secretary Kamal Bhimani said chit funds are the "most over-regulated" sector in the country. "They are regulated at two levels; first by the Reserve Bank of India, the principal regulator, and by the state government."
"We are not like bank. The margins on which we work and the latitudes we have is very small," he added.
The association said that attributing the Saradha scam on the whole sector will only affect genuine chit funds that contribute to the economy.