Kerala Kaumudi Online
Sunday, 27 September 2020 10.33 AM IST

EDITORIAL: Again investment fraud


Investment fraud is not new to Malayalis. Still they, sometimes knowingly, fall easy prey to the fraud. They are the most vulnerable among the people who get cheated by finance companies.
It was recently that Popular Finance owners closed down their establishment and went underground. It is true that they, who fled, embarrassing the people, were nabbed by the police. The case may go on for years. Before fleeing, the owners had submitted a pauper petition in the court.
They had declared that they would sell their properties and clear the financial obligations, thus trying to show up as good people.
Though the manager along with his family tried to flee to some foreign country, police made timely intervention to catch them.
Raids in their houses and establishments are continuing.
Like any private financier, they also attracted investments after offering high interests.
The allegation now is that crores of rupees they had amassed from investors were transferred to foreign bank accounts. This needs to be probed. The loss for investors is said to be anywhere between Rs 1000 crore and Rs 2000 crore.

And it was at the same time another financial fraud story came to light. It is the story of a money fraud under the cover of a jeweller shop.
Big investments were received from friends and relatives for Fashion Jewellery with Manjeswaram MLA as the chairman. The police the other day raided the house of the MLA and associates. People had also given gold besides money as investment. It is learnt that the financiers had collected Rs 130 cr from investors.
Though the investors have a certificate of the investment with them, they approached the police when they ceased to receive profit share, the interest or even the capital.
Police have filed about a dozen cases for illegal collection of money in the name of investment and cheating.
In the case of Popular Financiers, the alarm bell rang only when the company started closing their branches. The treachery came to light when the investors couldn’t withdraw the invested money or gold.

Such kind of financial frauds have been there since decades ago. The celebrated entry of finance companies began after the days of tricksters in the form of chit companies, goat, mangium, teak and plantation investment schemes came to an end.
Who finally benefits from finance companies? It is none other than their owners and partners. Though there are solid evidence on such financial frauds, people fall into their trap again and again.
Who all are responsible for this? We should not forget the fact that banks and the government have a big role in nudging people to invest in these finance companies. As the banks have drastically cut the interest rates, it is natural for people to get lured by these companies which offer 4-5 pc higher interest rate.

There are many people who live with the money they get as interest from their investments. As the banks cut the interests by 6 to 7 pc, there are many who had suffered financial crunch. At least some will fall in the trap laid by financiers.

The irony is that the government issues bonds that give 10 pc interest over the deposits received from NRIs but it are not ready to give the same benefit to the residents in the country. Similarly, the government takes loan from RBI at high interest rate.
If the government is ready to give the same interest to common citizens, it can amass crores and crores of rupees. But for this, there is no permission from the Central bank or Central government.
The general feeling is that governments have a good control over such financial establishments but there is no dearth of people getting cheated out of money.

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