editorial:
When the Saradha chit fund scam imploded in neighbouring West Bengal, one wondered how the company’s dubious credentials had not won over depositors in Sikkim. The State has after all earned itself quite a reputation of having an incorrigible weakness for down-line and chit-fund rackets, drowning crores in such scams of just about every make and scale. While the money carted away from Sikkim depositors in the Saradha scam remains unverified, the weekend brought proof that another suspicious operation based out of West Bengal –the Rose Valley Group – had been in operation for at least the past seven years in Sikkim.
The police raid on the company’s branch office in Gangtok recovered several documents, including receipts and registers, and while these may provide details on how much depositors here have risked in the company, this is only of secondary interest. The police will do its job of scrutinizing the documents and preparing its case, and while this is necessary to discourage future scams, one hopes that some agency pays enough attention to the profile of depositors who have put in money under the various schemes floated by the company. Irrespective of whether formal charges are drawn up against Rose Valley or not, it is necessary that the data collected is studied, analysed and a proper response developed to ensure that companies selling dubious products don’t continue to have it so easy in Sikkim. This section has spoken often about the need to involve more agencies and organizations in generating wider awareness of banking procedures and managing investment portfolios. On one hand, it is obvious that awareness about chit-fund schemes is reasonably high even in Sikkim, hence money deposited into these schemes would not necessarily be as ignorantly made as generally believed. That said, promoters of such schemes are continuously repackaging their sales pitches to tempt even the more skeptical potential depositors and managing to keep one step ahead of even the regulators. The only reliable defence against such schemes then is to ensure expansive awareness among people so that they can differentiate between secure and unreliable investments. This is necessary in Sikkim, and although this should have been initiated several years back, hopefully, it is still not too late. Those who have seen the down-line and chit-fund schemes play out in Sikkim will notice that in the initial years, they were limited to circulation among government employees. At that time, only government servants had the cash liquidity [thanks to their salaried status] and hence ‘agents’ of such schemes targeted government offices. Of late, liquidity has reached rural Sikkim as well with the opening of more opportunities for enterprise and the spate of land acquisitions. In many cases, these are first generations handling so much cash, uninitiated to banking and ripe for the plucking by motivated agents. This has been the case in the past with chit funds registering high turnovers from rural areas. A study of the depositors list of Rose Valley in Sikkim will hopefully shed even more light on the ‘at risk’ group in Sikkim.
But such information will be of little use if it is not used to address the situation and arrest the continuing loss of people’s money. Admittedly, the government is not really responsible for what people do with their disposable incomes, but by notifying the Sikkim Protection of Interests of Depositors Act, the State Government has appropriated this responsibility. Since awareness delivers the only real defence, this option needs to be more earnestly pursued. It would have been ideal if there were good NGOs on the ground to carry this message, but that not being the case, the task will have to be taken up by the panchayats. The Reserve Bank of India now has an office in Sikkim and it has been trying to warn people here against such companies. RBI’s reach will now need to be enhanced by involving the panchayats. One must also bear in mind that nothing works better for awareness than personal stories, and the campaign should involve people here who have lost money to such schemes. They will be able to deliver the warnings more convincingly.
The police raid on the company’s branch office in Gangtok recovered several documents, including receipts and registers, and while these may provide details on how much depositors here have risked in the company, this is only of secondary interest. The police will do its job of scrutinizing the documents and preparing its case, and while this is necessary to discourage future scams, one hopes that some agency pays enough attention to the profile of depositors who have put in money under the various schemes floated by the company. Irrespective of whether formal charges are drawn up against Rose Valley or not, it is necessary that the data collected is studied, analysed and a proper response developed to ensure that companies selling dubious products don’t continue to have it so easy in Sikkim. This section has spoken often about the need to involve more agencies and organizations in generating wider awareness of banking procedures and managing investment portfolios. On one hand, it is obvious that awareness about chit-fund schemes is reasonably high even in Sikkim, hence money deposited into these schemes would not necessarily be as ignorantly made as generally believed. That said, promoters of such schemes are continuously repackaging their sales pitches to tempt even the more skeptical potential depositors and managing to keep one step ahead of even the regulators. The only reliable defence against such schemes then is to ensure expansive awareness among people so that they can differentiate between secure and unreliable investments. This is necessary in Sikkim, and although this should have been initiated several years back, hopefully, it is still not too late. Those who have seen the down-line and chit-fund schemes play out in Sikkim will notice that in the initial years, they were limited to circulation among government employees. At that time, only government servants had the cash liquidity [thanks to their salaried status] and hence ‘agents’ of such schemes targeted government offices. Of late, liquidity has reached rural Sikkim as well with the opening of more opportunities for enterprise and the spate of land acquisitions. In many cases, these are first generations handling so much cash, uninitiated to banking and ripe for the plucking by motivated agents. This has been the case in the past with chit funds registering high turnovers from rural areas. A study of the depositors list of Rose Valley in Sikkim will hopefully shed even more light on the ‘at risk’ group in Sikkim.
But such information will be of little use if it is not used to address the situation and arrest the continuing loss of people’s money. Admittedly, the government is not really responsible for what people do with their disposable incomes, but by notifying the Sikkim Protection of Interests of Depositors Act, the State Government has appropriated this responsibility. Since awareness delivers the only real defence, this option needs to be more earnestly pursued. It would have been ideal if there were good NGOs on the ground to carry this message, but that not being the case, the task will have to be taken up by the panchayats. The Reserve Bank of India now has an office in Sikkim and it has been trying to warn people here against such companies. RBI’s reach will now need to be enhanced by involving the panchayats. One must also bear in mind that nothing works better for awareness than personal stories, and the campaign should involve people here who have lost money to such schemes. They will be able to deliver the warnings more convincingly.
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