The dark side of chit funds

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What was initially thought to be a freak accident soon turned out to be something straight from a B-grade flick. The dead Ramesh had fallen out with his employers, the Himalayan group, and launched another outfit to take on his former bosses. The Himalayan group’s bosses—two school dropouts with a criminal history—allegedly decided to do away with the competition. Their outfit had grown miraculously from a one-room operation to 58 state-wide branches with over 10,000 employees, all in less than seven years.

The outfit hired an old truck for the job and two of them lay in wait for Ramesh on the highway. Another thug reconnoitred the road, guiding the killer truck on his mobile phone as it approached. Only one man in the car survived, and he is now paralysed.

Just when the cops thought they had cracked the case with witnesses, mobile phone call records and other back-ups, no less than 18 important eye witnesses to the conspiracy and its after events mysteriously turned hostile in court, amid allegations that a lot of money had changed hands. Then came a deluge of allegations by the accused men that politicians, including current KPCC chief and then Rajya Sabha MP Ramesh Chennithala, had wangled lakhs of rupees from them, promising to get them out.

The case had served to draw concern about the scale and nature of the burgeoning chit and loan-sharking scene in Kerala, a good part of it run with scarce government control. The state with a population of over three crore has close to 50,000 registered chits in operation, with the collective turnover running into hundreds of crores. There are about 6,000 money-lending institutions while all the commercial bank branches together would total only about 4,000. Being one of India’s top consumer states, easy credit is in great demand and these operators help themselves to the vast segments that the commercial banks would balk at servicing.

Many of these outfits are run ruthlessly and turf wars and fly-by-night operations are all too common. All that is still needed to float such an outfit here and escape the government’s attention is to get the head-office registered in places like Jammu and Kashmir or Faridabad (as in the case of the Himalayan group) or Gurgaon or elsewhere up north.

Jammu is a particular favourite. Thousands of these outfits in Kerala claim their HOs to be in Jammu though government officials say many of them may not have ever seen J&K.