January 27, 2013

Asim Dasgupta warns of chit fund ‘crisis’

KOLKATA: Former finance minister Asim Dasgupta today warned of an impending crisis in the state because of an unprecedented rise in mobilisation of deposits by chit funds, willy nilly holding the Trinamul government responsible for pushing small savers towards a bubble that may burst.

“The chit funds that are mobilising money now will start facing repayment obligation after a few years… A crisis is awaiting as the model is unsustainable,” Dasgupta told a news conference this afternoon.

The growth of chit funds — sources said the number may not be less than 3,000 — in the state has become a political hot potato for the Mamata Banerjee government as the Opposition has blamed the ruling party for the mushrooming of these entities, which promise high returns to depositors.

Depositors are either promised high rates of interest — at times around 30 to 40 per cent a year — on their deposit or different varieties of assets like land or property at attractive places at a future date.

Sources in the state finance department said the annual collections by the chit fund companies would not be less than Rs 15,000 crore.......

Asim warns of chit fund ‘crisis’

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