Sudipto Sen, the chairman of the Saradha group of companies, was arrested in Kashmir on April 23, 2013, for allegedly defrauding lakhs of depositors who had invested in various schemes floated by his companies.
After the Saradha group went bust, Mamta Banerjee, the chief minister of West Bengal callously told the duped investors, “let go whatever has gone”. However after two days, she announced a Rs 500 crore relief package for the hapless investors. In light of the unfolding events, this article attempts to analyse the political economy of the dubious shadow finance organisations in West Bengal.
The Modus Operandi
Let us take a look at the modus operandi of the Saradha Group of companies. The group collected money from the investors, through agents, promising them either land or a flat, or an option for a refund with a rate of return ranging between 12-24 per cent approximately, as per the Securities Exchange Board of India (SEBI) notice.1 The agents in turn were assured of a commission ranging from 15 to 20 per cent on the funds mobilised by them, according to local media reports. In some schemes, the group promised that on a deposit of Rs 1 lakh an investor will get Rs 10 lakhs after 14 years. If the same amount of money was kept in a fixed deposit in a bank for the same period, the amount accrued would be Rs 4 lakh. In other words, the rate of return promised by the group was more than double of that promised by commercial banks. According to some media estimates, the number of agents employed by Saradha group may run into thousands or even in lakhs, while the total amount of money mobilised by the group can run into thousands of crores. The huge collection of money from the agents was deposited with the main company which loated 160 companies (according to the letter submitted by Sudipto Sen to the CBI), including a large number of newspapers in various languages and TV channels in Bengali. Read More
Coourtesy: Economic & Political Weekly
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