All India chit fund body backs Margadarsi, says no complaint against firm

The All India Association of Chit Funds on Thursday said there is no complaint from the public on the misuse or misappropriation of their funds or any delay in getting their chit amount from Margadarsi.

Hyderabad:Taking exception to the press note issued by the Andhra Pradesh Crime Investigation Department (CID) on alleged irregularities by Margadarsi Chit Fund Private Ltd, the All India Association of Chit Funds on Thursday claimed that there were no complaints against the firm.

The body in a press release said the CID is comparing registered chit companies with Ponzi and multilevel marketing companies like Sahara, Sharadha, or Satyam Computers whose failure was on account of the misuse and misappropriation of public funds. The association also said what chit funds accept from their subscribers are not deposits at all and with the kind of assets they have, it is impossible for Margadarsi to run away with public funds.

Even assuming that there was/is any violation on the part of a financial intermediary, the solution lies in getting it corrected, as is the practice even with RBI, and not by any coercive steps, and publicity, as is being seen now. Creating a scare among the subscribing public can only fast forward the alleged damage and hence our concern." The body further said it is worth mentioning that there is no complaint from the public on the misuse or misappropriation of their funds or any delay in getting their chit amount from Margadarsi.

The CID has asked central agencies like the ED and the Income-tax department to probe the Margadarsi, floated by media baron Ramoji Rao, for alleged violations of the chit fund law after it found that the firm's cash deposit records were "bloated and incorrect". Additional Director General (ADG) of Police (CID) N Sanjay told reporters in New Delhi on Wednesday that Margadarsi allegedly raised deposits "without permission of the RBI".

However, the company - in a statement has denied its involvement in any wrongdoing and claimed that action is being taken against it to "tarnish and destroy" its reputation as the state government thinks media coverage by 'Eenadu' is "biased". Responding to the allegation on the extra profit made by Margadarsi on the interest income, the chit fund body said companies work for profit and the extra profit made if any only speaks for the financial health of the company and profit making in business is not a crime. (PTI)