Musings for a responsible society

Amidst the dark and grey shades increasingly engulfing, invading and piercing deeper and deeper, let me try to enjoy the little smiles, genuine greens, and the gentle breeze. Oh! Creator! If you don't exist, my vain!
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Chit funds, my mother and the Saradha scam

My life centered around the word and world of Chits since my childhood. Whenever I asked my mother to buy any toy or ice cream, the answer would be, ‘No money, we need to pay for the chits’. My sister and me hated chits so much, as most of my mother’s salary was drained as subscription to chits. But later we realized that it was a very good investment strategy. My mother bought every consumer durable of the house like TV, Refrigerator, Water pump, furniture etc. through her chit savings. She renovated the house and invested in jewellery through careful and calculated bidding at chit auctions. In fact, there used to be tacit understanding between her teacher colleagues at the time of chit auction. They would have discussed and decided who was in dire need for funds at that point of time so that others would never jack up the bid. Even today, after several decades, she continues to invest in chits. But she has been wise enough to invest only in the chits promoted by the government companies and co-operative banks. She forces my professor sister and me to subscribe to the chits of the Kerala State Financial Enterprises (KSFE). I agree, but boldly default on the monthly subscriptions. I know, my mum will pay on my behalf promptly! KSFE, which is state-run has a blemish-free record. 

Millions of people use chit funds, a rotating savings and credits association, as an avenue for savings, meeting expenses and for making investments. This is because the chit sector is less sophisticated, more transparent and easily accessible. This is one of the oldest financial sectors, unique to India. However, after the Saradha scam, there is a lot of hue and cry against chit fund companies. Thousands of people from the lower middle class invested their hard earned money in the group and shocked to hear the news that the company has been closed. Incidents of suicides were reported from various parts of West Bengal as many lost their entire life savings.

Why chit companies became cheat companies?

Blame it on our regulatory enforcement. We are very good at making rules. But fail in our enforcement. Apart from the Central Chit FundsAct (1982), most of the state governments have their own chit regulations. For example, Kerala state enacted the regulations as early as in 1914. Thus, there is no dearth of sector specific regulations. The rules and procedures of Registrar of Companies, though not fully equipped to curb proliferation of ‘paper’ companies, are not complied. This has resulted in having multiple companies registered from a single address with all possible permutations and combinations in the names of Directors. Thousands of companies vanish every year after collecting huge sums of money from millions of people.

(phooto source: PTI-New Indian Express)

Where were the auditors of these companies, who were supposed to be the watchdogs? Laugh with me! Most of these auditors are nothing but predators that suck the blood of their clients. None to regulate them, as they are ‘self-regulators’! (See my article). There are a few sincere and committed auditors and audit firms. But they are side-lined by the mighty audit firms, who never want to leave their large clients to whom they are more eager to offer consultations than audit. 

The need for stringent enforcement

In a greedy, unethical and lax environment that nurtures shameless competition to amass wealth adopting any means, the hapless and financially illiterate common people suffer the most. In India, though investigations were conducted on hundreds of fraudulent banking companies, only a microscopic minority of investors have got their money back. Then what is the use of such investigations, when the victims have not been compensated and the scams continue to happen at regular intervals across the country?

 Authorities need to enforce the rules stringently and ensure that every rupee invested by common man is repaid back with interest. No individual or agency should be allowed to engage in chit business without following the procedure. It is true that there are thousands of genuine chit funds, both in private and public sector catering to millions of people. These ventures need to be encouraged as they create the habit of saving and also provide financial security. 

                                                                                (c) Sibichen K Mathew
Views are personal. Comments are welcome. 

Click links below to read other articles in Cyber Diary on related subject

Satyam: A case of worst audit failure

Frauds, Scams and a Corporate Lokpal

Click HOME to see all articles in Cyber Diary


Indian Passport in 7 days

Though I have issued several tatkal recommendations in prescribed Form for known and deserving cases in the last several years, I was very apprehensive about  going to the passport office myself for getting my passport reissued.  Official passports always came without any hassle of visiting passport office and gave a lot privileges at International immigration desks. As the personal passport was due for expiry, I called up my travel agent for assistance. He said that the entire process is online and the passport office does not allow travel agents to do it for the applicants.  That was happy news! But I was still apprehensive. How easy that could be?

I logged into the website of Passport Office to find out the latest procedure. As there was no immediate necessity for the passport, I had decided to apply through ordinary procedure rather than tatkal or through official channels. I wanted to experience how fast a citizen can get a passport in the ordinary course.

The details are clearly given in the website: how to apply, what is the fee, what are the documents required etc.  After filling up a very simple Form online, an appointment should be taken for submission of original documents and finger printing. But my attempts to get a slot for appointment never materialized. No slots were vacant on any days I tried. One of my friends later told me that I should log in at 30 seconds past 6 pm on first few days of the month and that through using internet Explorer and not Chrome or Firefox.  Too complicated, I felt.

As suggested by my friend, I went around 9 am to Passport Seva Kendra with the online acknowledgment sheet, and original and photocopy of a) Proof of Residence, b) Proof of identity, c) No Objection Certificate from the employer in prescribed format, d) existing passport, e) Surrender certificate of the official passport possessed by me and f) Rs 1500/- in cash for the fee. I stood in the queue which was fast moving. In the first counter, they ensured that I have brought all documents along with the photocopies. In case, anyone has forgotten to take the photocopy, there is a Xerox provider at the same spot. From there I had to go to counter A, B and C for further verification of documents, photographing, finger printing etc. Though there are hundreds of applicants, entire process has been streamlined through network and proper business process flow system. There is no confusion at all. Within about 90 miinutes I got the acknowledgment with a marking that passport is granted. I had a very pleasant experience. To my surprise, the government officials in the office were more polite and quick than the outsourced personnel.

Within two days, the official from the jurisdictional police station contacted me for verification. I submitted the copies of the documents along with photograph to them. On the 7th day of my application, the Passport Office despatched my passport!

This is a classic example of the success of e-governance projects in public service delivery. I really appreciate the way the Ministry of External Affairs in India and the team of officials have implemented the project with the technical support from the private sector. This has eradicated corruption and administrative bottlenecks.

My advice to all those who want to apply or renew the passport:
-Login to the website and fill the Form. Get an appointment online or reach early at the passport office for walk-in appointments
-Be clear about what original documents you should carry. It is clearly mentioned in the website. Carry photo copies of all documents with you.
-Have a good breakfast in the morning. Carry a few newspapers or magazines. Or carry your smartphone or tablet so that you won’t get bored inside. Be mentally prepared to spend a few hours in the office.
Go back home and track your application status online. They will send you sms and email once the passport is despatched.  You don’t have to wait too long for your passport to reach you! Trust the system. It is not always bad!
(Comments are welcome)
                                                                                    (c) Sibichen K Mathew

Click below to read related articles:

Stiglitz says, one-third wealth of United States is with the top one per cent!


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