Kolkata: Under massive pressure over the chit fund scam, West Bengal will on Tuesday enact a new law to deal with companies that take public deposits. But it is based on an old draft that has been withdrawn and its critics say it will do more harm than good.
The draft 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among West Bengal's lawmakers on Saturday shows it to be more or less a copy of an old one from 2009, which is being withdrawn. What's worse is that it will take at least six months to implement the new law as it will need the Centre's clearance. The Opposition says the whole exercise seems pointless.
CPI(M) leader Biman Bose said, "The present government wants to bail out the culprits. They do not want to stand by the victims."
This law, the TMC claims, has more teeth than the old one. But critics say it could do more harm than good. The draft law says, "The state would not only have the authority to search, seize and confiscate properties of defaulting firms,
but more importantly... that if such action is taken against a company to repay depositors' dues, all mortgages taken by the company will stand cancelled."
That section is sure to deter banks from giving loans to such companies. This provision, according to lawyers and bankers, can result in banks immediately recalling loans from deposit taking companies. And this will not only compound their mounting difficulties, but may also trigger a quick collapse.
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.