Mamata Banerjee vs CBI: What is the Saradha scam?

The Mamata Banerjee-led West Bengal government and the central government are at loggerheads over the CBI investigation into the Saradha chit fund scam. The standoff between the state and the central government started after the CBI reached Kolkata Police Commissioner Rajeev Kumar's residence on Sunday to question him on the scam. Kumar was the head of the Special Investigation Team (SIT) Mamta Banerjee's government had set up to investigate the Saradha scam back in 2013. In response to the CBI's action yesterday, the Mamata Banerjee started an indefinite dharna in protest against the Centre, which is still ongoing.  

In a latest development, the CBI on Monday filed a petition in the Supreme Court, seeking directions to Kolkata Police Commissioner Rajeev Kumar to cooperate with the investigation in the chit fund cases. The agency also informed the apex court that despite being summoned multiple times, Rajeev Kumar failed to cooperate and created hurdles in the investigation.

The West Bengal government has also moved Calcutta High Court against the CBI's attempt to question Kolkata police chief Rajeev Kumar in connection with chit fund scam cases. The Calcutta High Court will take up the matter on Tuesday.

Meanwhile, West Bengal Governor Keshari Nath Tripathi has sent a report to the Home Minister Rajnath Singh on the prevailing situation in the state.

Both Lok Sabha and Rajya Sabha have been adjourned for the day in wake of CBI's action on Sunday evening in Kolkata where the CBI tried to interrogate the Kolkata Police chief.

Here's all you need to know about  Saradha chit fund scam

• Saradha Group chit fund scandal was one of the major financial scams in India which duped 1.4 million investors of Rs 1,200 crore with its illicit money pooling schemes promoted through lustrous brochures and the promise of unfeasible high returns. The group was using collections from new investors to make payments to the previously-enrolled members, rather than from income generated through investments. Among others, the activities of these companies were found to be in serious violations of the Companies Act, the Sebi Act, and several provisions of the Indian Penal Code.

• The scam, wherein lakhs of investors in West Bengal and neighbouring states were defrauded of thousands of crores through illegal money pooling activities, came to light early 2013. The case had become a political hot potato with Mamata Banerjee-led West Bengal government facing flak from various quarters. It was alleged that the West Bengal government had a direct link with Sudipta Sen, the Chairman of the chit fund group.

• To maintain a clean public image, the Saradha had group invested in Kolkata's iconic football clubs Mohun Bagan and East Bengal and also sponsored Durga Puja events.

• The states which were highly affected by the scam were West Bengal, Odisha, Assam, Jharkhand and Tripura.

• Chit funds help small traders and businessmen save excess cash on a daily or monthly basis, it's a major savings option in India especially popular in rural India. Interest rates are around 12 per cent a year - which is low, considering money lenders, on whom many rural Indians rely, charge as much as 72 per cent. Interest on bank fixed deposits is around seven to nine per cent.

• According to media report, Saradha scam, which was run by Saradha Group, might have raised as much as Rs 1,200 crore through its chit funds, before the company collapsed in April 2013.

• Following the unearthing of the scam in April 2013, Mamata Banerjee-led West Bengal government set up a Rs 500 crore relief fund for small investors who had put money in the scheme.

• On March 14, 2013, Corporate Affairs Minister Sachin Pilot presented a list of 87 such companies in Parliament, against whom complaints had been received for indulging in Ponzi schemes. Seventy-three of these were from West Bengal.

• On April 23, 2013, Chairman and MD of Saradha Group, a consortium of over 200 private companies, Sudipta Sen, along with Debjani Mukherjee and Arvind Singh Chauhan, were arrested from Kashmir.

• In April, Securities and Exchange Board of India (SEBI) Chairman U.K. Sinha said at a seminar in Mumbai more than Rs 10,000 crore had been raised by so-called money circulation schemes, or by people who run collective investment schemes but refuse to be under any sort of regulation. "People who invest in such products are simple, ordinary workers," says Sinha. The money raised by these firms could be higher than SEBI's estimate, given that Sen alone is said to have duped investors of Rs 4,000 crore.

• After serious allegations of international money laundering, the case was transferred to the CBI by the Supreme Court of India in 2014.

• By the time the CBI took over the case, the SIT had arrested 11 people, traced 224 immovable properties, seized 54 vehicles and had filed chargesheets in nearly 300 cases, as per media reports.

• Several high profile names cropped up during the investigation, including those of Trinamool Congress MPs Kunal Ghosh and Srijoy Bose, former West Bengal Director General of Police (DGP) Rajat Majumdar, former sports and transport minister Madan Mitra and former finance minister P Chidambaram's wife Nalini.

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Edited by Chitranjan Kumar