Margadarsi Chit Fund Scam: AP CID sends notice to subscribers with Rs 1 crore cash deposits

Amaravati: In the ongoing investigation into the financial fraud involving Margadarsi Chit Funds Pvt Ltd (MCFPL), the Andhra Pradesh Criminal Investigation Department (APCID) has issued notices to the individuals who have made large cash deposits towards their subscriptions, in violation of the guidelines set by the Reserve Bank of India (RBI) and the Central Board of Direct Taxes (CBDT) regarding cash transactions.

In a release given by the additional director general of police CID N Sanjay, it is stated that the CID has specifically targeted subscribers who made cash deposits in chit groups amounting to over Rs 1 crore. These individuals are under scrutiny to determine the nature and legitimacy of their transactions.

The AP CID urged all subscribers who have received notices to cooperate with the investigation. “By providing accurate and timely information, subscribers can assist the authorities in uncovering the truth and bringing the culprits to justice. The investigation into the financial fraud involving MCFPL is a top priority, and all necessary measures are being taken to ensure a thorough and impartial inquiry,” said Sanjay.

“The CID aims to ensure compliance with the regulations set by the RBI and the CBDT, designed to prevent money laundering, financial fraud, and other illicit activities,” said the statement. The RBI, as the apex regulatory authority in the Indian financial system, has put in place guidelines to maintain the transparency and integrity of financial transactions, particularly in cases involving large sums of cash. The CBDT has also introduced new rules governing cash transactions to enhance compliance and curb illicit practices.

It may be recalled that CID attached movable properties worth Rs 1,035 crore of MCFPL, and are now in the process of winding up nine branches in Andhra Pradesh. The chit fund company was found violating norms of the Chit Fund Act, 1982, diverting funds to their associate companies, and laundering money by accepting cash subscriptions in high amounts in violation of various prevailing laws.

The MCFPL, established on August 31, 1962 in Hyderabad, has a total of 108 branches in four states - Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu. They have 37 branches in Andhra with 2,351 chit groups and 1.04 lakh subscribers. For the finance year 2021-22, the annual turnover in Andhra and Telangana states was Rs 9,677 crores.