In
the third week of April, Saradha Group went kaput expressing its
inability to repay the investors. The company collected funds from
poor people in cities and villages across West Bengal. Since then,
many depositors and even agents have committed suicide enable to cope
with the loss of funds from the company which promised them high
returns.
The
Company
Saradha
Group was incorporated in 2006, by Sudipta Sen in
Kolkata to earn money on simple business model of raising money from
people, lending it to them via lottery system and in return giving
the investors their interest. Although the working of this system was
similar to a chit fund, it was not the same. The modus operandi of
the group was simple: it promised high returns between 15-40% to
small investors in very short span and raised more money to repay the
original investors. The cycle got vicious cycle and more bandwagon of
people joined the circus. The company since then has floated around
160 different entities (to avoid the regulatory clutches) entities
mainly mobilizing funds under various collective schemes. It had
business interests across construction, travels, media and many more.
Since then the company had amassed almost more than Rs. 180 crore.
The company came under the SEBI radar in 2010, when the companies
registered under Saradha group crossed more than 100 entities with
ROC.
In
light of the recent Saradha scam, some of the safety lessons to be
followed by the common man are as follows:
Do
not keep a herd mentality:
Investing in a particular product because your family friend or
neighbor has invested in the same is inappropriate. It is usually
seen that when we invest on recommendation of any trusted alias, we
don’t read well the risk involved in the investment. We don’t
understand the features and utilization of proceeds of the money.
We get carried away with the rough estimates of returns and follow
the crowd blindly.
Do
well your research:
It is necessary that when we invest our money in any collective
scheme or any non-accredited rated product, understand well the past
performance and business model of the company. It is also better to
study the details of the promoters and their business associations.
It is necessary to compare these factors and not select a product on
mere good returns.
Exit
Mode:
It is necessary to understand what are the probable routes to exit the fund. What are the charges applicable on discontinuance and the
deductions applicable? Also, if there is any lock in period, we
should understand the same as it is not possible to withdraw the
money in between the lock in period.
Be
Aware of your rights:
It is necessary to understand the procedure of redressal to avoid
running across offices for exiting the fund. It is feasible to read
about your rights in the company website or in a product brochure.
It gives a clear picture to fight against the concerned entity for
any wrong doings in future.
Don’t
be a passive investor:
Be aware of the performance of your investment regarding its news
and management announcements. It is feasible to check the necessary
credits are received by us and also, information about any company
structure.
Avoid
risky assets:
Beware of the investment proposals which promise excellent and
exceptional high returns in short span of time. No investment can
double in fortnight. So, it’s always wise to invest in avenues
that are tried and tested.
Click here to get the list of regulators to register your grievances
Thanks and Regards
Team
Email: saarthifp@gmail.com
