Press Release



A delegation of the Left Front of West Bengal met the Prime Minister Shri Manmohan Singh on May 9, 2013 urging for a neutral, fair and high level investigation into the massive fraud of committed by the Saradha Group of companies and also the return of thousands of crores  of rupees to all the affected depositors immediately. The delegation comprised of five MPs and 6 MLAs and the former Finance Minister of West Bengal, whose names are appended in the memorandum.  The delegation will also be meeting the President. The copy of the memorandum presented to the Hon’ble Prime Minister is given below.







Dr. Manmohan Singh

Hon’ble Prime Minister of India

New Delhi.


Hon’ble Prime Minister,


Please refer to the Memorandum submitted to you on  August 22, 2011 by the Left Front Legislative Party in West Bengal as well as the Memorandum placed before you on December 19,  2012 by the Left Front Members of Parliament, drawing your kind attention to the alarming problem of irregularities being committed by certain financial companies (so-called ‘Chit Funds’ in terms of local parlance in West Bengal) and requesting for an urgent action by the Central Government. Unfortunately, however, no timely intervention was made by the Central Government and the present State Government. As a result, a massive fraud has been committed by an irregular financial company (Saradha Group) by suddenly closing down all its offices and resulting in a widespread default on repayment to lakhs and lakhs of depositors, belonging mostly to the poorer sections in rural and urban areas of West Bengal. Employees in the print and electronic media owned or controlled by this Saradha Group have also lost their jobs due to this sudden closing down. There has been, due to the misdeeds of this company and similar other companies as well as  the Central policy of making small saving schemes less attractive and commission of the agents reduced, a severe fall in the small savings collection in the State – from Rs. 8,409 crore of net collection of small savings in Post Offices of West Bengal in the last financial year ( 2010 – 2011) of the Left Front Government to   ( -) Rs. 987 crore in the next year ( 2011 – 2012) and to (-) Rs. 165 crore in 2012 – 2013 ( upto December), adversely affecting the State as well as the small savings agents.

    You are kindly aware that among the different types of financial companies, there is one category of companies which raise deposits from the people, invest the  money and promise returns  in terms of interest, etc. These companies are required to register with the Registrar of Companies       (ROC) under the Ministry of Corporate Affairs of the Central Government, and then also obtain permission from the Reserve Bank of India (RBI) and function by obeying the guidelines of RBI. If there is any violation of these guidelines, then the RBI can take necessary actions, including stoppage of work of the concerned companies. There is another category of financial companies which raise funds from the people in terms of share/debentures, and then invest the money in various ventures, including real estate, hotels, television channels, newspapers, entertainment business etc., with promise of returns in terms of lands, apartments, etc. These companies are again to register first with ROC and then get approval from the Securities and Exchange Board of India (SEBI) under the Union Finance Ministry, and obey the guidelines of SEBI. If the guidelines are flouted, then SEBI can take action in terms of prohibiting the activities of the concerned companies. The Saradha Group belongs to this second category. It may be noted in the context that the State Government does not have any role in giving approval of these companies.

   Grave financial irregularities are committed by both these two categories of companies when they violate the guidelines of RBI or SEBI, as the case may be, by alluring promises in terms of false and unrealizable offers of interest or returns. There is usually a period after which these returns are to be paid back to the depositors. In the intervening period, the concerned companies keep on raising funds and often make very partial payment, and then suddenly close their activities without any notice, thus cheating the common people in a large scale as has been the case with the Saradha Group, as  mentioned above.

   Under the circumstances, the State Government, within its limited power, can take action if any written complaint of being cheated is obtained, by immediately arresting the proprietors of the concerned companies, attaching all of their properties and then arranging through the Hon’ble Court, the sale of the properties for repaying back to the affected depositors. If there is no written complaint, even then the State Government can conduct enquiry on its own and submit the findings to the concerned Central Agencies (SEBI or RBI) for taking necessary action.  The State Government can also pass a Bill in the State Assembly for Presidential assent for implementing the Act, so as to take necessary action at the very initial stage of the offence in terms of decentralized administrative and legal framework in the districts.

   The Left Front Government in West Bengal had, during its tenure, taken all these actions. In 1980- 81, when some large financial companies had started cheating people, the State Government, on the basis of written complaint, took exemplary action by  arresting the heads of the  concerned companies and then attaching their properties for beginning the process of repayment through the Hon’ble Court. When again in 1991- 92, several companies had cheated people, the State Government in the Finance Department and the Home Department ( involving both  Kolkata Police and District Police),  on the basis of written complaint, took prompt action by arresting heads of nearly 96 companies, attaching their properties ( both movable and immovable , including bank accounts) and then starting  a Public Interest Litigation  on its own in the Hon’ble Calcutta High Court with a verdict for selling the attached properties through the Court – appointed special officer for beginning the process of repayment of money to the depositors. In the year 2002 – 2003, when about 17 companies had cheated people, the heads of all of these companies were arrested, again on the basis of written complaints, and a process of prompt repayment was undertaken. Along with taking those steps, the Left Front Government had also introduced in 2003 -2004 a bill (namely, the West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2003) for taking early preventive and punishable action against irregular financial companies with a decentralized framework as mentioned before. However after repeated exchange of views and urging by the State Government, when a much delayed Central response ( although  for substantially similar bills for several other State Governments, Presidential assent was accorded with more promptness) was obtained in August, 2009 with Presidential message for a few changes, these changes were promptly incorporated and a new bill (The West Bengal Protection of Interest of Depositors in Financial Establishment Bill, 2009)  was introduced and passed unanimously ( with TMC MLAs also present) in the State Assembly on December  22, 2009. The new Bill was then sent for Presidential assent. However the Presidential assent, despite reminders, could not be obtained during the tenure of the Left Front Government.

    It needs to be mentioned that from 2008 – 09, a new feature emerged when several companies within jurisdiction of SEBI had started operating in a manner which created apprehension of cheating of people.  However, no written complaint of cheating was received by the State Government. The Left Front Government, therefore, started enquiry on its own involving jointly the Finance Department and Home Department (in terms of Kolkata Police and District Police) and then submitted its findings concerning four relatively big companies ( including Saradha Group) to SEBI for necessary action. For the Saradha Group, the attention-drawing letter was sent by the Left Front Government on August 23, 2010. We now find that after closing down of offices of Saradha Group that SEBI has recently issued an instruction on April 23, 2013 on the Saradha Group to pay back to the depositors within a period of three months and with prohibition on taking any further deposit. Although this is a step in the right direction, it has been much too delayed.

   It is also noted with serious concern that we still do not know about any follow-up action by the TMC-led State Government regarding the enquiries started by the Left Front Government into the affairs of four companies mentioned above. We do not know because despite our specific queries, no answer was given in the State Assembly. Moreover, when a discussion on this issue was proposed on December 11, 2012 two Left Front MLAs            (including one lady tribal MLA) were beaten up. We also do not know what action was taken by the TMC – led State Government on the 2009 Bill which was unanimously passed in the Assembly (with TMC MLAs present) for Presidential assent in the first twenty months of its existence. We now find that on the basis of a communication from OSD & ED Special Secretary to the Governor of West Bengal to the Secretary to the West Bengal Legislative assembly a motion was passed in the Assembly to withdraw the bill. The aforesaid communication reads:  The Ministry of Home Affairs, Government of India has now returned the aforesaid Bill, considering it to be withdrawn by the Government of West Bengal as it has been decided to recast the Bill in order to strengthen it for the purpose of protecting the interest of the depositors in Financial Establishments. This appears to be a clear violation of legislative power of the State Assembly, since prior approval of the Assembly was not taken by the present State Government before sending its views to the Centre for return of the bill, 2009. Moreover, in terms of the communication mentioned above, the following sentence in Sl. No. 6 in the statement of object and reasons of this new bill seems confusing:  It has been advised by the Government of India to withdraw the said Bill. Then, with only a few changes in the 2009 Bill, the new Bill has been passed in the Assembly and sent for Presidential assent. We also find that some of these changes were not necessary and there is also a possibility of further complications and delay.  We suggested a remedial amendment to this new Bill, and a quicker course of action which was not accepted. After raising our anxiety about further delay which may be caused by this bill, we did not however stand on the way of passing of the bill. We want an early action on the part of Hon’ble President in terms of Article 201 of the Constitutiuon.   

    Meanwhile, the sufferings of depositors remain unattended.  We therefore urge upon you for considering the following actions:

.(1) As several states are involved in this massive fraud of Saradha Group, CBI should immediately be involved in the investigation of this fraud under supervision of appropriate Hon’ble Court.

    Since SEBI is the nodal Central agency, and the recent verdict of the Hon’ble Supreme Court (2012) clearly directs SEBI to be the agency for necessary action, SEBI should also be instructed in coordination with CBI and  SFIO to move into this Saradha case immediately, for a proper and  comprehensive investigation into the total list of properties (including different forms of illegal transfers) for immediate attachment and for moving the Hon’ble Supreme Court as well as Hon’ble Kolkata High Court for selling of the properties needed  for repayment to the depositors without delay, and also for exemplary punishment for the offending persons.

   This entire process of investigation and attachment should be, for reasons of neutrality and fairness, under the appropriate supervision of Hon’ble Supreme Court and Hon’ble Calcutta High Court.

(2) Where there are reasons for anxiety regarding other financial companies in the State, joint action as mentioned about, may be undertaken immediately for correcting the practices of these financial companies for preventing further damages.

(3) National small saving schemes should be immediately restored by the Central Government to their previous status of attractiveness, with simultaneous restoration of commission of agents by both the Centre and the State Government.

(4)  Along with the highest priority on refund of depositors’ money,    attention may be given from the national level for a massive programme of an economic reconstruction of the lives of affected depositors (small and marginal farmers, small and tiny entrepreneurs,  traders etc.) in terms of soft loans from the nationalized banks to the willing persons as well as rejuvenating the movement of Self-Help Groups in the State and democratically elected co-operatives ( now rendered inoperative in the State) so that this massive loss can be transformed into a programme of reconstruction for growth of production and employment.

There is also  a need for paying attention to problems of journalists, performers and others connected with the closing  down of newspapers and TV channels in terms of inducting new entrepreneurs (without any link with irregular financial companies), or in terms of helping formation of co-operative of employees through assistance including soft loan.

(5) An all-out democratic and decentralized campaign should be started immediately among the affected people for convincing them to stay away from these irregular financial companies and to keep their savings, among others, specially in post office small saving schemes, nationalized banks and co-operative banks.

       With regards,




Surjya Kanta Mishra

   Sitaram Yechury, MP

Leader of the Delegation, Leader of the Opposition in West Bengal Assembly




Subhahas Naskar, MLA

   Barun Mukherjee, MP



Paresh Adhikary, MLA

   Manohar Tirkey, MP



Prabodh Chandra Sinha, MLA

   Basudev Acharia, MP



Anadamoy Mondal, MLA

   Probodh Panda, MP



Chand Mohammed, MLA

   Asim Dasgupta,

   Former  Finance Minister,

   West Bengal