Agencies/Kolkata


Police said yesterday they had arrested the head of a privately run savings company that collapsed, leaving tens of thousands of its investors penniless.
Police in Kolkata said Saradha group chairman Sudipta Sen and two of his business associates were taken into custody in the northern state of Kashmir where they had fled.
The collapse last month of the so-called chit fund which offered returns of 40% and more has triggered massive street protests in eastern India and three investors have committed suicide, police said.
Sova Sengupta, a depositor, yesterday wept over the financial losses she has suffered as a result of the failure of the firm.
“I deposited Rs100,000 ($1,800) for better returns. I have lost all my savings,” the 75-year-old Kolkata depositor said.
West Bengal Chief Minister Mamata Banerjee on Monday turned down calls for a state-backed bailout to help affected investors, many of whom say they have lost their life’s savings in the company’s collapse.
“What has gone, has gone,” Banerjee said.
She promised to introduce a new law to crack down on financial firms engaging in fraudulent practices.
Media reports say more than 100,000 depositors were hit by the group’s collapse.
The Saradha group, headquartered in Kolkata, was believed to have been worth around $3.3bn from money collected from its depositors, according to media reports.
The group had also diversified into sectors such as construction, tourism, hospitality, agriculture and media.
Ongoing protests in West Bengal spilled yesterday into the northeastern state of Assam where depositors attacked offices of the group in the state’s largest city Guwahati and elsewhere in Assam, the Press Trust of India news agency said.
As capital market regulator Securities and Exchange Board of India and the Serious Fraud Investigation Office of the corporate affairs ministry started taking action against chit fund companies for flouting rules, which raised concerns over safety of public money, pressure on the group’s finances mounted.
Crisis in the group was brewing since January, which forced it to recently to wind up at least 10 media organisations - newspapers and television channels - that it had launched or acquired since 2010. Over 1,000 journalists and non-journalists have been rendered jobless.
The Bharatiya Janata Party’s West Bengal unit demanded a Central Bureau of Investigation inquiry into all the chit fund groups operating in the state and urged the depositors to withdraw their money from these companies.
“We want that all the chit fund organisations be probed by the CBI,” BJP state president Rahul Sinha said.
He said there were specific reports with his party that some of these groups have transferred money to banks in Dubai and also purchased properties there.
“The state agencies don’t have the powers to reach Dubai… that’s why we are asking for CBI inquiry,” he said.
He said with a CBI probe into the matter, names of many Communist Party of India (Marxist) leaders will come out along with those of the ruling Trinamool Congress leaders.
“Trinamool is totally dependent on these chit fund groups while CPM gained from them earlier,” he alleged.
He urged the people to immediately withdraw all their money from these chit fund groups.
Sinha also said that if action is not taken now, West Bengal would see a major disaster.
“This is just the tip of an iceberg and a major disaster is waiting to strike the state, if proper action is not taken by the government,” he said.
The BJP alleged that the CPI-M and Trinamool both share the blame for the growth of chit fund groups in the state.
“The CPI-M is blaming the Trinamool, but we want to say that CPI-M has given birth to these chit fund groups and Trinamool has nourished them. If CPM is the father, then Trinamool is the mother,” Sinha added.