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Saradha Group Financial Scandal: Presented By-Year

The Saradha Group financial scandal involved a Ponzi scheme run by the Saradha Group that collapsed in 2013, causing losses of over $3 billion. The scheme targeted rural populations with limited access to formal banking by promising high returns. When the scheme collapsed, over 1.7 million small investors lost their savings, devastating West Bengal's economy. The money could have been used to help alleviate poverty, build infrastructure projects, or invest in higher education. The scandal highlighted the need for greater financial regulation and literacy.

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Dhrubajyoti Datta
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210 views11 pages

Saradha Group Financial Scandal: Presented By-Year

The Saradha Group financial scandal involved a Ponzi scheme run by the Saradha Group that collapsed in 2013, causing losses of over $3 billion. The scheme targeted rural populations with limited access to formal banking by promising high returns. When the scheme collapsed, over 1.7 million small investors lost their savings, devastating West Bengal's economy. The money could have been used to help alleviate poverty, build infrastructure projects, or invest in higher education. The scandal highlighted the need for greater financial regulation and literacy.

Uploaded by

Dhrubajyoti Datta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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1

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.
11

THANK YOU

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