HYDERABAD: Taking cognizance of a TOI report on the alleged irregularities in chit funds, the Telangana Registration and Stamps Commissioner and Inspector General Nadeem Ahmed has ordered a probe into violations by chit fund companies.
TOI had published a report titled `Cheat funds thrive by inflating land value’ on December 21.
Following this, the state stamps and registration department has ordered assistant chit registrars (ACRs) in the state to not accept mortgage of immovable property as security for chits.
District registrars have also been asked to verify each and every case of mortgage of immovable property to ascertain the violations and submit a report in the next 15 days as the matter involves lakhs of subscribers.
Officials have also been ordered to substitute all the mortgaged property with fixed deposit receipts (FDR) and submit a compliance report every month as per Section 20 of Chit Funds Act read with amended Indian Trusts Act.
Chit fund companies, particularly those based in Warangal, Ranga Reddy and Hyderabad, were allegedly violating the rules by accepting immovable property mortgaged as collateral security.
The probe order said “The issue raised is significant in the context of subscribers’ interest. The district registrar shall submit a specific report on each mortgage and, if required, shall conduct a spot inspection of the property to arrive at the actual value.”
“If the district registrar finds that the value of any mortgaged property was inflated and accepted by the assistant chit registrar, then he shall immediately direct the foreman of the chit fund company concerned for substitution of the security. The substitution shall be the FDRs equivalent to the chit value,” the order states.
“The district registrar shall also specifically mention whether the assistant chit registrars acted recklessly in accepting such properties which are inflated in valuation intentionally by the foreman. If so, he shall immediately initiate necessary disciplinary action against the erring assistant chit registrars and chit registrars besides initiating action deemed fit against the chit companies and foreman for such violation as per the law,” the probe order said.
Confirming the enquiry, Telangana stamps and registrations joint inspector general V Srinivasulu told TOI: “We have ordered an enquiry into the allegations of irregularities, and issued further directions not to accept the land or property as mortgage and instead follow the rules and submit only FDRs.”
Section 20 of the Chit Funds Act, allowed immovable property to be accepted as a security, subject to the condition that the value of such property was not less than one and a half times the value of the chit amount. The Indian Trusts Act was amended on July 27, 2016, and notified in April 2017.