The Hindu : Tamil Nadu / Chennai News : Chit fund frauds rampant, police concerned

Online edition of India's National Newspaper
Wednesday, May 17, 2006

Tamil Nadu

Tamil Nadu - Chennai

Chit fund frauds rampant, police concerned

P. Oppili

368 persons lost around Rs. 2.77 crore to chit fund companies

CHENNAI: A spurt in the number of chit fund fraud cases reported in the last few months is causing serious concern for the Greater Chennai police.

Though police authorities said they registered only 10 complaints, a senior officer says the police was the last resort for depositors who lost their money in chit fund companies.

Available data with the police reveals that 368 persons had lost money to chit fund companies. The victims lost cash totalling about Rs. 2.77 crore and the police were able to recover about Rs. 1 crore, the officials say. An officer from the Central Crime Branch police told the The Hindu that in most chit fund fraud cases, victims were women. The officer explained that women join unregistered chit companies and deposit amounts regularly without informing their family or spouses. They approach the police only after the chit fund organiser disappear with the cash.

He also said that most complainants are unwilling to register cases against the errant organisers. They approach the police only to help them in getting back their money.

Reduction in bank interest rates has led to illegal chit fund companies thriving in the city, the officers opined. In most cases, the complainants register inflated amounts as being lost.

Talking about the action taken, the officer said those cheated could prefer cases only under two Sections of IPC — 420 (cheating) and 406 (criminal breach of trust) — against the offenders. Another officer said such illegal chit fund companies functioned in many Central and State Government offices. Severe action needed to be initiated against such activities. A few months ago, over 100 employees from the Chennai Port Trust complained to the city police stating they paid subscription to an unregistered chit fund company run by one of their colleagues. Following the complaint, police arrested the person and recovered the money.

`Inadvisable'

Police officers said it was inadvisable to join unregistered chit companies, as chances of the organiser escaping with cash could be high. Similarly, victims should contact the police immediately and register complaints, they added.

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