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Sonarpur, South 24 Parganas (West Bengal): He had spurned the offer of a 50,000-a-month job at the Saradha Group to keep working as one of its agents. Today, after one of eastern India’s biggest deposit-taking companies collapsed, Debasish Banerjee is counting the losses he inflicted on depositors— 60 crore.

Now in his mid-50s, Banerjee was one of the blue-eyed boys of Sudipta Sen, the fugitive chairman and managing director of the Saradha Group, and presided over a chain of 10,000 sub-agents spread over eight districts in West Bengal.

Banerjee cut his teeth in door-to-door deposit collection in the early 1980s as an agent of Peerless General Finance and Investment Co. Ltd—a residuary non-banking company, which pioneered in collecting small savings. Though it didn’t ever default on repayments, Reserve Bank of India (RBI) forced Peerless to stop taking deposits in 2005-2006. This spawned the growth of unregulated deposit-taking companies in West Bengal and other eastern Indian states.

Exploiting the strength of Peerless’s impeccable repayment track record, its redundant field agents helped found new firms that went after people’s savings, mostly in rural areas.

Among those that Banerjee recruited to collect deposits for the Saradha Group was Ayan Naiyya—an unemployed youth of 24. Naiyya says he mobilized 60 lakh from one Nischindapur village in South 24-Parganas district, where he lives.

There are around 5,000 unemployed people in Nischindapur and other adjoining villages. At least 300 of them became agents of the Saradha Group, according to Naiyya, who used to earn around 8,000 a month as commission. At least half of the agents from Nischindapur are now on the run for fear of being lynched.

Not just the unemployed youth, Banerjee managed to rope in a large number of housewives to work for the Saradha Group. One such was Rupa Naskar, who says she has been driven out of her home by her in-laws because she had collected 1.5 lakh from neighbours for the Saradha Group. They vandalized her home on hearing last week that the group had gone bust and there was little hope of recovering their deposits. She sold her jewellery to repay them from her own kitty, but couldn’t.

Naskar says she started working as an agent of the Saradha Group to augment her family income.

Her husband works as a contract labour, and the 3,000-4,000 she earned every month from commissions “meant a lot for us".

When the going was good, Sraboni Ghosh, a lowly district official in South 24-Parganas district, bought herself a scooter with her monthly commission of 20,000 from the Saradha Group, but has had to flee her home. The scooter, she says, must have been taken by her depositors.

In South 24-Parganas district, depositors have not only vandalized the Saradha Group’s offices, they are making off with whatever they can lay their hands on in agents’ homes, Banerjee says.

“We have a full-blown law and order situation," said a key government official being consulted on the crisis. He did not wish to be named.

Returns promised by the Saradha Group and other deposit-taking firms were higher than highstreet banks and the government’s small savings schemes. They used to offer 15-18% annualized returns on short-term deposits, but for the people they targeted, that little bit more made a lot of difference.

After retiring from Garden Reach Shipbuilders and Engineers Ltd—a public sector firm—Sankar Das deposited 5 lakh in a monthly income scheme run by the Saradha Group.

He had initially deposited his retirement benefits with a bank and was receiving around 6,000 in interest, he says. The Saradha Group’s scheme promised him 1,500 more per month. He fell for it because he needs to support his son, who, working at a laundry, doesn’t earn enough to support his wife and children.

A large number of agents, too, have lost their own savings.

Munnat Ali Naskar, who raised 28 lakh for the Saradha Group, had deposited his family’s own savings of 4 lakh. His savings gone, he has even been hounded out of his home.

“Poor people will explore all possible ways to increase their income," says Amiya Bagchi, a former professor and an economist, adding that the poor are “gullible" and easily get carried away by promises of even marginally higher returns.

“As for the women, they are worse off," Bagchi says. “It is hardly surprising that they look for ways to make the extra buck because they are often abandoned by their husbands and have to fend for themselves."

Because the Union government stopped paying commission to agents who collected deposits for state-run small savings schemes such as the Public Provident Fund, they turned to private firms, said Asim Dasgupta, West Bengal’s former finance minister and an economist.

Firms such as the Saradha Group paid huge commissions, going up to 30% of deposits collected. This was shared across the chain with the person at the bottom of the layered marketing chain receiving around 10%.

The Saradha Group’s Sen said in a recent undated letter to his so-called marketing members, or people such as Sonarpur’s Banerjee, that his business collapsed because of the unviable commission structure and the unbridled expansion of the sales force.

The group, it appears, collapsed under its own weight, having spread across West Bengal and other neighbouring states at a breakneck speed.

And it started from a district where its penetration was almost unrivalled—South 24 Parganas, says Banerjee. “It all started late last year when cheques bounced and it became increasingly difficult to convince people to give more money," he recalls.

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