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SARADHA GROUP FINANCIAL SCANDAL

Presented By-
DHRUBAJYOTI DATTA
M.Tech TEP 1st year
Introduction 2

 Caused by the collapse of a Ponzi scheme run by Saradha Group.

 collective investment schemes popularly but incorrectly referred to

as chit funds.

 According to Special Investigation Teams or SIT, the amount money

involved is Rs.- 2500 cr.
Amount of scam 3

• If we did fixed deposit this

amount in SBI for 5 years then
the value in 2018 comes-
• Interest rate for FD of
5 years is 8.75%
• Therefore the value in
todays date=
20,000 cr X (1.0875)5 =
30,421.2 cr

http://www.twenty22.in/2014/05/cbi-to-probe-saradha-scam.html
Background 4

 Rural population with limited access to formal banking facilities.

 Absence of two major help lines for poor people

i. Placing their money safely in deposits.

ii. Being able to borrow money for their needs.

 People lured by Ponzi schemes that promise much higher returns.

 Lack of financial literacy and investor awareness encouraged the growth

of similar companies.
Key People 5

Source: https://www.newsilike.in/the-saradha-scam-whats-happened-so-far
Financial operations 6

 By 2012, SEBI was able to classify the group's activities as collective investment
schemes rather than chit funds—and demanded that it immediately stop
operating its ivestment schemes.
 Saradha Group did not comply with this ruling and continued to operate until
its collapse in April 2013.
 Collapse 7
 On 7 December 2012, Reserve Bank of India (RBI) advised the W.B. Govt. to
take action against financial malpractice companies.
 In January 2013, the group's cash inflow was, for the first time, less than its
cash pay-outs.
 6 April 2013, Sen wrote an 18-page confessional letter to the CBI and fled
after posting this letter.
 After evading the authorities for a week, Sudipto Sen, Debjani Mukherjee and
Arvind Singh Chauhan were arrested in Kashmir, on 23 April 2013.
 SEBI asked Saradha Group to immediately desist from raising any further
capital and return all deposits within three months.
 Economic Effect 8
 Diverted an estimated sum of Rs.-240
billion (US$3.5 billion) from small savings funds
promoted by state government since 2010.
 Show a steady decline in small-savings deposits
and a rise in withdrawals, which left a reduced
amount from which the state government could
borrow.
 Instead of being used by government for public
funding, the money went into Ponzi schemes that
were either diverted to foreign locations or were
put to use for private gains.
 Because most of the Saradha Group depositors
came from the lowest economic strata, the loss of
the investment would cause a further decrease in
social mobility.
 What We Could Do 9
 Below poverty line Indian -> 170 million. If we simply donate 30,421.2 cr, they
would get Rs.- 1800 each. Which is about there half month income.
 In Bharatmala Pariyojana Highway Project(2018) 83,677 km of NH will be
constructed at a cost of 5.35 trillion. Approx Rs.- 6.39 cr / km. That means we
could make 4760 km of NH. As a comparision total length of NH in Gujrat
5017 km.
 As per outcome budget(by MHRD) of 2016-17, IITs were given 4548.51 cr and
2510 cr to NITs to
 import world class teaching in UG, PG, Ph.D.
 Upgradation of infrastructure.
 Increase Ph.D output.
If we could utilise scam money in higher education sector we could improve our
college infrastructure lot more.
 Discussion 10

 A bank fixed deposit or a

recurring deposit will offer
better returns.
 If you do not have access
to regular banking should
you consider a chit fund.
 Unregistered chit funds are
popular among traders and
small businessmen because
they are able to put the
unaccounted for money to
use.
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THANK YOU