The Enforcement Directorate (ED) has alleged that Sree Gokulam Chits and Finance Co Pvt Ltd collected a staggering ₹592.50 crore from individuals residing outside India, flouting the regulations of the Reserve Bank of India (RBI). The financial transactions reportedly included both cash and cheques, and were deemed violations under the Foreign Exchange Management Act (FEMA), 1999.
In a statement issued on Saturday, the ED stated that it seized ₹1.5 crore in cash following a two-day search operation at properties linked to the firm in Chennai and Kozhikode. The searches were conducted based on specific intelligence that the company was collecting chit fund subscriptions from non-resident individuals without necessary approvals from the concerned authorities.
The ED said that out of the ₹592.50 crore collected, a significant ₹371.80 crore was accepted in cash as subscription fees for chit fund schemes. Furthermore, the agency claimed that large sums were paid in cash to persons living outside India, a clear contravention of Section 3(b) of FEMA.
According to the agency, “Collecting cash from persons resident outside India is a violation of the regulations framed by the RBI. This led to the breach of Regulation 4(b) of the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations.”
The search operation was conducted at two premises in Chennai and one in Kozhikode, with around 20 ED officers from the Cochin zone involved. The raids concluded by Saturday noon, but the agency did not reveal the specific location from where the cash was recovered.
This investigation marks a significant development in the ED’s ongoing crackdown on alleged financial irregularities by chit fund companies operating in violation of Indian financial laws.
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