Saradha scam is dead, but not ponzi schemes

KOLKATA: Memories are short, and in the case of investors in West Bengal, they seem to be extremely short. In less than a year after the Saradha ponzi scam led to thousands losing their savings, such schemes are rearing their head again.

The state's consumer affair department has received some 125 complaints since December against both new and existing ponzi scheme operators, especially in rural belts. Meanwhile, the 'safe savings scheme' launched by the state government in last November to offer an alternative investment avenue to small depositors has yet to gain momentum.

"We have been receiving complaints from a cross-section of people in various parts of Bengal, especially in rural Bengal, since last December. We have forwarded all of them to the chief minister's office," consumer affairs minister Sadhan Pandey said last week.

The department has also received complaints against companies operating in the heart of Kolkata and that has baffled many as urban investors are expected to be more savvy and aware of the risk of investing in such schemes. According to the consumer affairs minister, his department has not initiated any action on the new complaints, while the Saradha case, which surfaced in April last year, is still being investigated.

The revival of ponzi schemes is perhaps due to the lack of alternatives available to small investors in the state where banking reach is still a far cry. On an average, each bank branch in Bengal covers nearly 14,000 people against the central bank's prescribed limit of 10,000.

The state government's safe savings scheme is run by West Bengal Infrastructure Development Finance Corporation (WBIDFC), a non-bank finance company registered with the Reserve Bank of India. WBIDFC has engaged 30,000 agents to mobilise depositors, who would visit a branch of a designated bank and open no-frills accounts with minimum customer identification formalities. At the same time, depositors would submit a request with banks to transfer the amount to WBIDFC. The state-run company offers 9.0-9.25% interest rate on these deposits.

But the scheme has failed to take off the way the government would have liked. Banks like Allahabad Bank and Uco Bank have refused to partner state-run WBIDFC in the scheme while the State Bank of India is still negotiating with it.