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Apr 28, 2013 at 09:34am IST

Chit fund scam: Mamata under pressure, to bring in new law against defaulting companies

Kolkata: In the wake of the collapse of the Saradha Group, an under pressure Mamata Banerjee is all set to bring a new law that allows takeover of chit fund companies and confiscation of properties. The opposition though has slammed the move saying the Bill has nothing new.

This comes even as another investor committed suicide in Purulia. The draft of the new Bill that was circulated among West Bengal's lawmakers on Saturday shows it to be more or less a copy of an old one from 2009, which is being withdrawn.

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Worse, it will take at least six months to implement the new law, as it will need Centre's clearance. The opposition says the whole exercise seems pointless.

"The present government wants to bail out culprits. They do not want to stand by the victims," said Biman Bose, CPI-M leader. However, this law, the TMC claims, has more teeth than the old one. But critics say it could do more harm than good.

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The draft law says that the state would not only have the authority to search, seize and confiscate properties of defaulting firms, but more importantly, if such action is taken against a company to repay depositors' dues, all mortgages taken by the company will stand cancelled. This section will deter banks from giving loans to such companies. This will not only compound their mounting difficulties, but may also trigger a quick collapse.

That apart, the new law states that its provisions will be applicable to cases that precede it. Which means, the state government clearly intends to prosecute the Saradha Group under the provisions of the new law. But some legal experts say this attempt could come a cropper if legally challenged.

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