The life of Durga Prasad Mishra, former managing director of chit fund company Micro Finance Ltd (MFL), now in custody on charges of defrauding gullible depositors of a combined Rs 500 crore, is an interesting one.
He’d once taken a private bus on lease to run as a passenger carrier between his home town of Bhanjangar and Berhampur in south Odisha to meet his expenses. Now, it appears, he owns a business with a Rs 1,000 crore yearly turnover.
“He initially started a company named Suman Finance in the early 1980s, similar to MFL. Due to default in payments to investors and public ire, he was on the run till 1983. On his return, he launched MFL,” said an acquaintance
Mishra, 65, is from Nuagaon village in Ganjam district. Also, incidentally, the same area of origin for Pradeep Sethi, chief of Artha Tatwa, an entity in the soup for allegedly duping investors of Rs 500 crore. Sethi is in jail since last year.
Probe agencies said MFL was collecting deposits in single and double digit denominations from kiosks and other small investors, to begin with. Company employees said it was operating as a residuary non-banking company since 1992. Under the aegis of MFL, Mishra had spread his wings beyond Odisha and set up 800 branches across 18 states.
He had also launched companies in sectors such as electronics, hotels, media, film and entertainment, steel, spices, construction and health. He was the managing director, director and additional director of as many as 13 registered companies, according to a website profile..
MFL was barred by the Reserve Bank of India (RBI) in September 2012 from collecting deposits from people. To dodge this, Mishra floated a Micro Leasing and Funding Pvt Ltd to continue doing so.
When the chit fund scam surfaced last year, the economic offences wing (EOW) of the state police’s crime branch had gone after MFL. It had registered 13 cases against the company and shut its branches across the state, also get bank accounts of Rs 76 crore frozen, while seizing other assets.
The company had fraudulent ways of keeping its operations going. An RBI team noted a signage at a company branch in the Nilagiri area with an alleged endorsement from the state panchayati raj (PR) department.
On verifying, it was found the company had got a forged endorsement letter, apparently got issued by Ajay Kumar Swain, a former private secretary to the secretary of the department. The letter, addressed to all district collectors, sought support from the district administration for the firm’s operations.
RBI apprised the state government. In March this year the PR department wrote to the EOW to initiate action. Swain was arrested in March, along with a director of the company, Baikunthanath Patnaik. Later, another director, Ashok Patnaik, was held.
Mishra was arrested by the CBI on Sunday. “He was absconding since March. They have more than 10 sister companies, including the MBC TV channel. It has been alleged that they have collected more than Rs 500 crore from depositors,” said the probe agency.
Mishra, when produced in court by CBI, said: “There was not a single complaint against me in 30 years.”
It is suspected that Mishra had political clout that helped him to grow his illegal business.