Cheat funds thrive in Telangana

Posing a risk to financial security of chit fund subscribers in Telangana, chit fund firms particularly those based in Warangal, Hyderabad and Rangareddy are inflating value of land and properties while mortgaging them to the government as collateral security worth crores. Usually, fixed deposits are submitted as surety to Registrar of Chits by firms, which can be used in case companies fail to pay. Instead of fixed deposit returns, land is mortgaged. And though the value is less it has been inflated, and the mortgage document is used for multiple chits. In Telangana, at least 585 chit fund companies are running 11,068 groups of ?65,000 crore. Joint IG stamps and registrar said a caution note would be issued to all district chit registrars and assistant chit registrars. Firm are violating rules. Investigations found most chit fund companies based in Warangal that opened many branches across Telangana mortgaged land. For instance, in one case a 224 square yard land value in Khasibugga which was ?8.5 lakh in 2014 was shown as ?1 crore, and the same mortgaged document was produced for multiple chits as security. A Warangal-based chit fund firm running chits in Mettuguda in Hyderabad, Adilabad, Malakajgiri-Medhcal, Sangareddy, Mahabubabad, Khammam and other places submitted 325 mortgaged deeds in 2016 to 2017 to assistant registrar of chits on lands it had in rural areas of Jangaon and Raghunathpally by allegedly inflating the market value. A chit fund firm owner said, “We have taken open market value. Assistant Registrar of Chits visited the land and he registered it only after inspection. There is no fraud.”