The Central Chit Fund Act 1982 came into force in the state from Monday. The Union finance ministry issued orders notifying the implementation of the Act in the state along with Mizoram. Though the Centre had brought the Act way back in 1982 and asked all the states to implement it, Andhra Pradesh chose to ignore it.
Official sources said the Act was very stringent and pro-depositor. Among other tough features, the Act prohibits chit fund companies from running other businesses and forces them to deposit all the money collected from depositors in banks. Implementation of the new Act gains significance in the backdrop of the multi-crore Margadarsi Finance controversy.
The state government initiated action against the company accusing it of inter-twining the business transactions of all its group companies including Margadarsi Chit Funds. The company was also charged with diversion of funds from chit funds and financiers to other businesses. In fact the group openly admitted that funds were diverted to create assets.