Kerala-based finance firm Popular Finance, at the centre of a multi-crore financial fraud, had humble beginnings as a small chit fund venture started by a teacher, T K Daniel.
As a government teacher, Daniel could not run a chit fund enterprise. Therefore, it was run in the name of his brother and son.
Slowly, a major financial empire came up at the village of Vakayar near Konni in Pathanamthitta district.
As depositors were paid the interests on time, people's trust in Daniel grew. With the enterprise growing into a financial firm, Daniel resigned from his teaching post.
Popular Finance came into existence in 1965 as a gold finance company. After Daniel, his son Thomas Daniel (Roy) took over the reins of the company.
The firm grew with over 250 branches both within and outside Kerala. Twenty-one new firms under the Popular Finance brand were also started. Even when the COVID-19 lockdown was imposed in the country, the interests were deposited duly in the customers' accounts.
When Roy took over, the company was a limited liability partnership. Later, Roy's eldest daughter Rinu Mariyam Thomas took over as the chief executive officer. Though she was credited with bringing discipline to the company, sources said that the firm was racking up debts all along.
After complaints were filed against the firm, Roy Daniel, the managing director, surrendered before the police last week. His daughters have also been nabbed by the police.
The extent of the fraud might exceed Rs 2,000 crore, according to reports. However, what led to the downfall of the finance empire is yet to be unravelled.
Lost a lifetime of savings
The toppling of Popular Finance has pushed the middle-class people into despair, who had invested all their savings in the firm.
The depositors were promised an interest of 13 per cent. This was later cut down to 11 per cent and then hiked to 12 per cent.
Popular Finance was known for the timely payment of the monthly interest. The customers believed that the deposits would be doubled in five years. Some of the customers had been painstakingly saving money for their daughters' wedding. The owners of Popular Finance are answerable to their plight.
Police to seek custody
The police will file a petition in court, seeking the custody of the Popular Finance owners. The petition is likely to be submitted after the Onam holidays.
The police are mainly probing the cheating charges. The police believe that the fraud was pre-planned.
The cops will carry out a detailed investigation into property assets, deposits in various countries and who are all involved in the fraud. The police will also question the former senior officials of the company in the coming days.
The fraud was pre-planned?
The police suspect that more people were involved in the fraud and made away with their share. The financial dealings of the relatives will also come under the scanner.
Even five years ago, the owners had a clear understanding that the firm was heading for a loss.
However, they only tried to start new branches and accept more deposits. The accused will have to be questioned in custody to get more clarity.
Currently, they have been charged with offences that are punishable with imprisonment of up to 10 years.
5 firms shut down, still...
Five financial firms, linked to the family, were shut down earlier. Several of them filed for insolvency. When these firms went into losses, the depositors turned up at the Vakayar office of the Popular Finance. And the deposit money was returned.
Roy was fully aware that depositors will turn up at Popular Finance if any of their family members' firms were shut. Whenever he sensed the possibility of a firm’s closure, he had stocked up the money in the bank account.
