Objecting to the use of word ’Chit Fund’ in multi-crore Saradha Group financial fraud, industry body CFAI on Monday said none of the entities of the Kolkata-based Group was operating as a registered chit fund.

“The failure of some Multi-level Marketing (MLM) or a ponzi scheme is explained as failure of a Chit Fund company. This is totally unfair,” All India Association of Chit Funds General Secretary T S Sivaramakrishnan said.

Saradha Group have got about 160 registered activities including realty and resort but not even one activity was registered as Chit Fund in the State, he said, while addressing a press conference.

“Our grievance is on failure of some other activity, why is it branded as failure of Chit Fund?,” he added.

The association also demanded that the government come out and clear the air over Chit Funds.

There are about 10,000 Chit Funds registered in India with annual subscription of Rs 30,000 crore per annum.

“We are governed by the Chit Fund Act 1982 and implementations by the respective states. This Act is notified in entire India,” he said.

“The principal regulator is the Reserve Bank of India, Act is made by Central Government and rules are made by respective State Governments,” Mr. Sivaramakrishnan added.

The regulator of chit funds is the Registrar of Chits appointed by respective state governments under Section 61 of Chit Funds Act.

Powers of adjudication vest in the Registrar and the state government concerned is the Appellate authority. In case of failure of a chit fund business, the responsibility for winding up such a business also vests with the respective State Governments.

As per the law, a Chit Fund company is not allowed to accept deposit from the public and can only accept subscription amount from the members.

However, Saradha Group accepted deposits from investors and worked as Multi-Level Marketing.

Meanwhile, the government has said several of its investigating wings like SEBI, RBI, IT department and Enforcement Directorate have begun crackdowns on Ponzi schemes and have initiated action against Saradha Group under various laws including the Prevention of Money Laundering Act (PMLA).