Two Biggest Scams in Chit Fund History:

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Ponzi Scam

A Ponzi scheme is actually a fallacious investment scheme wherever cash brought in by the newer investors is employed to pay off older investors. This creates an impact of an undefeated investment scheme. Of course, as long as cash coming into the scheme is bigger than the money feat it, all is well. The instant things is reversed, the scheme collapses. The scheme gets its name from associate degree Italian yank referred to as Charles Ponzi World Health Organization in 1919 ran associate degree investment scheme in Bean town, that secure to double the investor’s investment in ninety days, later move forty five days.

 

The Sharada Chit Scam:

 

Saradha account fund crisis in West Bengal was truly not a discount fund

Examination of Saradha’s investment plans showed that the Saradha collected cash starting from 10,000 rupees to  1,00,000 rupees for periods starting from between fifteen months and ten years. At the tip of the investment tenure, investors got the choice of taking a bit of land or Associate in Nursing flat, or just obtaining their a refund, with a mean come of 12-tone system to pure gold. It’s not clear whether or not this was the secure annual come or total. A lot of investors had opted for the money reimbursement.

 

In fact Saradha was investigated by the Securities and Exchange Board of India (SEBI) and on Gregorian calendar month 23, 2013 order it asked Saradha material possession to refund all the cash owed to investors among 3 months of the order. You’ll scan SEBI’s order here (pdf) SEBI known as Saradha as Collective Investment theme (CIS) that is outlined as follows.

Any theme or arrangement created or offered by any company beneath that the contributions, or payments created by the investors, square measure pooled and used with a read to receive profits, income, manufacture or property, and is managed on behalf of the investors could be a CIS