Chit fund scams: Millions of poor investors robbed of their right to dignity

A cold winter morning of February 2, 2019. 25000 colorfully attired Indians sit down on the road at Parliament Street braving the foggy chill. Zoom in on their faces and one cannot help but notice anguish, despair, anger, self-deprecation as well as a vehement disgust for the system well etched on their faces. Men, women and even children who were a part of the All Investor Safety Organisation (AISO) poured in from 17 states of India to register their formal protest at one of country’s largest rallies against chit fund scams. AISO has been at the forefront of raising the voice against these fraudulent companies and is active in all the states of the country. Addressing the crowd were a bevy of leaders and social activists who brought home the despicable truth of the chit-fund companies, very popular amongst the lower middle class rural as well as urban families as the preferred source of savings for a better future.

It may be noted that there are more than 350 chit fund companies who have looted the poor in India. A conservative estimate of the numbers affected are upwards of ten crore families. Pearl Agrotech Corporation Limited (PACL) registers itself as the biggest company affecting more than 5.85 crore families across almost all the States in India. What must also be taken cognizance of is the fact that many very senior BJP leaders were hand-in-glove with the management of PACL even as SEBI closed the company's business on August 22, 2014.

The movement against the company was started by AISO on August 2015 which filed a case in the apex court. On February 2, 2016, Supreme Court passed a favorable verdict that SEBI will pay the invested total amount of ₹49,100 crores to the investors who were affected by PACL within 6 months. This amount was to have been generated by auctioning the PACL land assets which is worth to ₹1.86 lakh crores (according to SEBI estimates). Under the chairmanship of R.M. Lodha, former Chief Justice of India, a committee was constituted to execute the compensation to be paid to the victims through SEBI. However, three years have elapsed and there no respite in sight for these poor families.

The problem is not just of economic loss but also of dignity and social standing for these poor ‘investors’. With little or no knowledge and access to formal banking system, they look towards such schemes to save for their future- children’s education, daughter’s marriage or just a better and a brighter future. Typically the network entails a set of agents and sub-agents who are a part of the close social network of the community with a considerable say. People look up to them and follow their advice while placing their hard-earned money in the chit-funds. So, the close knit structures of these networks or pyramids are usually made up of family and friends which means a lot more than collective wealth is at stake; not just the close bond of longstanding familial relations are at stake but agent’s honor, respect and position as also the dignity of the family is totally damaged leaving them virtual outcasts in the face of such scams.

Rajneesh Goswami came all the way from Uttar Pradesh and made a tearful plea to give him a rope to hang himself as his family life was completely destroyed. An agent of PACL, he had invested in the company and also built a successful network. Now with close to seventy lakhs rupees at stake, he has no idea how to ensure that his network gets compensated. He and his family are routinely at the receiving end of cruel remarks, threats as well as social ostracization. His children cannot step out of the house, his wife is under severe depression and he often is under attack of violent threats. Says a tearful Ramesh, “ what wrong did I do ? I followed what the company had asked me to do. I saw an opportunity to help people like us save for a better future. I am hounded everyday, they tell me sell your kids but get us our money. How was I to know that that they would be such scamsters? If killing me will free my family of this curse and give money back to my people, I am prepared to lay my life right now.”

Joining Rajneesh is an angry Lalchand Yadav who has traveled from Punjab. “How are we to know that these will be such cheats? They have celebrities inaugurating their projects or endorsing them. We trust these people as we think they are honest, so we naturally assume that these companies are safe and will respect our money. Politicians are spotted in their company. What does that tell us? We trust our leaders and these well known faces who lend credibility to these frauds.” He further spews, “ Modi and BJP leaders had assured us of quick relief, we voted for him and his cronies. He has let us down badly and we will die but never vote for these liars! I have never seen such a government who plays with the lives of people in this manner in my 59 years.”

Gita Bhatti who was a very successful agent laments, “ My child is virtually immobile, yet I am here to protest as I owe it to my people who have reposed their trust in me. Ultimately we are the face of the company. Our people don’t know anyone else and it is our word that they honored. I am duty bound to ensure that their money is paid back. The company’s assets are valued at least three times more than what it owes to us. Why can the government not liquidate and pay us back?” She further says, “ We cannot move out of our houses, people shower us with expletives beyond imaginations, not just us but our school going children are singled out as the chor ka beta or beti. Where is our dignity? It is better we just commit suicide and end the matter.”

“If this company was a fraud why was it made a hero? It is a registered company with people like Arun Jaitley ji as their advisor. Why was it endorsed and given awards? Why were the BJP leaders seen hobnobbing with the company?,” she questions.

Official records reveal that these scams have accounted for over 300 suicide cases across the country and the number is rising. Unable to bear the shame and ostracizing, these agents have no other recourse but to end their miseries by snuffing out their own lives. It is indeed ironic that these poor people had not only seen these schemes as a way forward for a better and a more dignified life for themselves, their families as well as their communities, but had also built a dream of a successful future pipelines for their yet to be born generations.

“ This present regime has ensured that all our hard earned money goes to a few of their cronies. They can write-off crores and crores of rupees held in debt by their few favored ones but sacrifice our futures blatantly and cruelly. There no jobs, farmers are under distress, small businesses have closed down on account of their ruthless policies to safeguard their friends. What recourse do we have to eke out a respectable living? How do we survive?,” asks a livid Ashok Kumar from Uttar Pradesh.

“There are women who used to scrimp and scrounge from their family earnings by sacrificing their own desires for the sake of their family” future. They had invested this money, a large number of them without the knowledge of their husbands to be able to have a future fund for their children’s education and marriages. These scams have totally wiped that saving and also their respectability in the eyes of their families. What’s to become of them? We are becoming more and more marginalized under this government’s regressive schemes and policies. People say this government is good, how is that? I say I will die but never vote for them again, ” quips another angry agent present at the rally.

The dubiousness of such schemes works like a double edged sword for the self-respect and economic freedom of women, and in an already patriarchal society pushes them further deep into the social injustice quagmire. Number of them have started their journey of economic participation with these pyramidical schemes which traditionally promise a flexible and fewer working hours and lucrative returns for small amounts while letting them be the masters of their own journey without a boss to deal with. So the family life stays uncompromised and income generation assured and they have a possibility of playing leadership roles in their communities armed with the new self-confidence. Large number of the female participants traditionally hide the extent of such savings from their families and generate the income by judicially managing their current finance; virtually foregoing a slice of their present for a better future promise. With dreams in their eyes of being able to provide better education and life to their children, they set out each day to take this dream to their friends and families. Failure to deliver the promised financial well being ensures that these female brigade of agents lose not just their dignity but even their face in front of their family and community and are shut out of the economic process for good.

Another aspect of the ponzi scamsters is that they interact through these crores of people or agents without showing up in person. Their agents are the supposed to be harbingers of change for larger populations. Little do these innocent agents realize the extent to which these ‘Get Rich Quick Schemes’ are a mere bubble waiting to be burst thus throwing not just their dreams up in the air but even decimating their goodwill in the peer groups and communities and wiping out their fragile self-respect. Mainstream media, moreover, does little to help reach cogent information. It further smears them as people driven by their greed and who have failed to do a requisite fact check before luring innocent family members and friends into their web of deceit. What it fails to or rather refrains from highlighting is the fact that these so called conniving agents are given a set of seemingly legitimate documents and coupled with celebrity endorsements and well touted political connection, there is very little or scope for fact checking beyond verification on SEBI website. One of the well-known channels while breaking the news of PACL scam several years ago noted how these agents worked like heartless people to fulfil their personal ambitions without caring a whittle for anyone else. If truth be told, these people are just as much if not more a victim of the same pressures; they have not only lost their own savings but also bear the guilt and shame of unknowingly leading others down the dark alley of misfortune. They are continually at the receiving end of their community’s, their family’s as well as the local administration’s disdain and harassment. Death seems like the only recourse for these despondent lot as was amply depicted by a placard held by some of the demonstrators- “ Ya Paisa do Warna Phansi do.” They do not see any hope in this lifetime to come out of this predicament.

Thus, largely marginalized because of a hostile community and their own guilt, we are looking at almost 20% of our people who have lost faith not just in the system but in themselves as well as their future of a better tomorrow. A pertinent question to ask here is -Can a nation move ahead with a significantly hostile, untrusting and pessimistic population? Let alone etching its place in the world socio-economic map, we are poised to topple into abysmal depths of despair rising from which indeed will be a formidable challenge. It is truly a sure shot Garibi Hatao move, just that the ‘I’ has been very skillfully dropped from Garibi by the current regime. Is anyone in the opposition listening and willing to restore the dignity to these teeming crores? The time for wiping their tears and offering empty words of encouragement is over, some real on-ground action is required to resurrect their faith in the system and more importantly in themselves. Strong networks are required to be built to educate people about such schemes, celebrity endorsements as well as the political connections. People have to be shown an alternative reality where the political leaders are shoulder to shoulder in sharing their burden by forming pressure groups at local levels and redressal committees as also local sitting MPs develop mechanisms to generate small and locally sustainable economic activities. Time for a strong joint action is here now, otherwise the dream of an economic tiger is just another paper dream , a mere chimera, a hoax touted at the sacrificial alter of millions of robust thinking ingenious Indians who given the right leverage could become next generation entrepreneurs steering this great nation onto a path of unprecedented glory.

In the words of Lalchand, “we all need to urgently unite and ensure that this government is uprooted and never allowed to return to power if we have to resurrect our dignity and well being.”

Knock Knock, is anyone listening ?