Did Gokulam Chits receive ₹372 crore in cash from NRIs for chit fund subscriptions? Here's what 'L2: Empuraan' producer told ED

Gokulam Gopalan, the producer of Mohanlal's latest blockbuster actioner L2: Empuraan, recently told the Enforcement Directorate (ED) that Sree Gokulam Chits and Finance Co Pvt Ltd, the chit fund company owned by him, received a total of ₹372 crore in cash from NRIs for chit fund subscriptions, The Indian Express reported citing probe details.

The ED questioned Gopalan after conducting raids at the premises associated with Gokulam Chits and Gopalan.  The ED raids against Gopalan and others came at a time when L2: Empuraan, the second part of the Lucifer trilogy, was embroiled in controversy. 

He further told the central agency that the company paid ₹7 crore in cash to its NRI subscribers in violation of the Reserve Bank of India's (RBI) regulations. The ED is probing allegations of irregularities in the functioning of the chit fund company owned by Gopalan.

The central agency is probing the company for alleged violations of provisions of the Foreign Exchange Management Act (FEMA). Gopalan was questioned by the ED on Monday at its Kochi office in connection with the case. 

Around 15,000 NRIs or their family members subscribed to the company's chit funds  schemes from 2002 and the total amount they paid was around ₹371.80 crore in cash. Moreover, ₹220.74 crore was collected in cheques towards subscription to chit funds from the NRIs. 

But how is this a violation of the RBI regulations? Before June 11, 2015, NRIs were not permitted to subscribe to chit funds in India. As per circular no. 107 dated June 11, 2015 issued by the central bank, NRIs were allowed to subscribe to the chit funds on non-repatriation basis. 

“The circular, however, specifically mandates that the chit fund company should get approval from the Registrar of Chits or an officer authorised by the state government to accept subscription from non-resident Indians on non-repatriation basis,” according to an ED official.

Before questioning Gokulam Gopalan, the central agency recorded the Gokulam Chits chief information officer Janakiraman R's statement. Janakiraman reportedly told the ED that the company never took permission from the Registrar of Chits or an officer authorised by the state government to collect subscriptions from the NRIs.