Kolkata: The defunct Saradha Group received deposits from an astonishing 1.7 million people, the West Bengal government has discovered in its ongoing investigation. That’s almost as many depositors as one of India’s smaller commercial banks.

Only about one million people though have so far filed for compensation with the five-member commission constituted by the West Bengal government in the wake of the Saradha Group’s collapse to investigate its operations and repay depositors.

At least 80% of these depositors are seeking refunds of 10,000 or less from the commission, according to state officials who did not want to be named.

These officials said they expect the total number of applications to increase to 1.2 million by the end of June, when the commission stops receiving complaints.

Going by the trend so far, total repayment claims may not exceed by much the 500 crore that the state has allocated for compensating Saradha depositors.

West Bengal, which may have to cut Plan expenditure to compensate the Saradha Group depositors, can ill afford such largesse, these officials said, especially as it will now have to do the same if other such pyramid schemes collapse.

The aim of the compensation package is to help the poorest of the depositors cheated by the Saradha Group, chief minister Mamata Banerjee had said at the time of announcing it, reversing within days her “what-has-gone-has-gone" stand on the issue.

That reflects the imperative behind ensuring that the anger of middle- to low-income depositors doesn’t translate into a loss of political support for Banerjee, ahead of national elections next year.

The group’s own records show it owed people around 1,700 crore when it went bust in April, but the repayment claims received thus far are much less than that, said one of the officials cited above.

Saradha Group chairman Sudipta Sen, who was arrested in April after going into hiding, had in a letter to the Central Bureau of Investigation (CBI) earlier this year acknowledged a liability of around 1,200 crore, which, he claimed, could be recovered by selling the properties owned by the group.

The state was unable to recover any money from the Saradha Group’s accounts and its properties weren’t as substantial as they were thought to be.

“It isn’t clear what the group did with the deposits it received in cash and it appears most of the deposits came in cash," said one of the officials cited above.

Asked whether the money could have been transferred abroad, he said “some leads" were being closely investigated. “But yes, the money we have so far managed to unearth is insignificant."

In the light of Sen’s allegations about forged receipts, the key question facing the commission is how to determine the legitimacy of refund claims, officials said.

Saradha group’s Sen said in his letter to the CBI that the accounting software had been hacked by some employees and fake receipts had been issued.

Records recovered from the Saradha Group’s offices are neither conclusive nor fully reliable, state officials said.

“The certificates of deposits produced by depositors in support of their claims cannot on their own be treated as genuine receipts," one of the officials said. “With most deposits being made in cash, determining genuine claims is one of the key challenges."

A section of state government officials are sceptical about chief minister Banerjee’s bid to bail out the worst hit with the 500-crore fund, a part of which will be raised through additional taxes on tobacco products, mostly cigarettes. They are of the view that it has set a precedent, and the state government may be forced to repeat it if other deposit-taking companies run aground.

Several other firms that have been collecting public deposits in West Bengal and other neighbouring states are threatened by the collapse of the Saradha Group, one of the biggest in the trade. If these go bust, the collective loss will be much greater, these officials said.

“These firms are also going to collapse, and it may not be too long before they do," said an official cited above. “A precedent having already been created, the state will be under immense pressure to compensate depositors of these firms too."

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