Action against six chit firms in Kochi

KOCHI: The registration department will soon initiate criminal proceedings against six chit firms in the district which were found to be operating either without required registration or running unauthorized chits.
The department is taking action against illegal chit firms in the district for the first time after the Kerala Chit Fund Rules 2012 came into existence.The practice till now has been to impose fines on unauthorized firms.
The firms against which the registration department is planning take legal action include Soubhagya Chits in Edavanakkad, Vypeen Kuries in Perumbadanna, Veechika Chits in Kalady, Eminent Chits in Kothamangalam and Saptasree Chits in Cherai, said district inspector N Nazeer. The firms were caught during raids conducted by the registration department last year as part of its plans to rein in illegal chit firms.
While some firms were running unauthorized chits after registering with the department, others were functioning without any registration at all. The companies need to receive permission from the district registrar for running chits after completing the registration process. "The companies can advertise chits only after getting permission from the district registrar. Many companies were doing so without the permission," said an official with the registration department. The district registrar has sent the report to the registration IG seeking his advice on how to initiate legal action against chit firms.
"As per the new rules, the department can initiate legal proceedings against the firms. There are provisions in the law to levy fines. But since it is a cognizable offence, we will initiate criminal proceedings," said Ernakulam district registrar general K Madhu.
Though there are over 300 chit firms in the district, only 159 of them are registered, sources with the department said. Many of them are running chits illegally after registering the firm under the Companies Act.
Meanwhile, the registration department is planning to intensify inspections on chit firms as per a decision taken at a meeting convened by district collector Sheik Pareeth recently.