Fly-by-night chit fund scams surge across Hyderabad, victims await justice

Illegal chit fund operators are defrauding investors across Hyderabad, Cyberabad, and Rachakonda by collecting large sums and disappearing overnight. Police have registered multiple cases, but recovery of funds remains a lengthy legal process.

Hyderabad: Fly-by-night chit fund business operators are luring the public and cheating them of their hard-earned savings in the city and its suburbs on a larger scale.

In recent months, several cases of the chit fund operators disappearing overnight after collecting huge amounts from the investors have been reported in the tri-commissionerates of Hyderabad, Cyberabad and Rachakonda.

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The chit fund operators typically rent a house to set up an office in some locality, operate for a few years in the neighbourhood and gain the confidence of the investors. One fine night, they wind up the business, vacate the house and disappear, only to be caught by the police weeks or months later.

“Most of them run illegal chit fund businesses. So there is no guarantee that the amount can be recovered easily from them. Either the chit fund operators are themselves duped by some investors or they start the business with an intention to cheat the public and create wealth,” said a police official.

The police explain that in such cases the police register a criminal case of cheating and under provision of the chit fund act and arrest the suspect and file a charge sheet in the court.

“The police can do little when it comes to facilitating the return of the money to investors. It is up to the courts to issue directions and the police will follow it. In certain cases, we get attachment orders of properties and after auction of the scammers properties distribute the money to victims. It is a lengthy procedure,” he added.

The police advise that the people before investing in money in chit fund business should primarily verify if the company is registered or not. This can be ascertained through the Registrar of Companies (RoC).

“People should understand that whenever huge returns are guaranteed, there are also huge risks involved,” said another official. Other than these chit funds, the public can invest in fixed deposits and recurring deposits among others that are available at banks and post offices.

What is a chit fund?

A chit fund is a type of rotating savings arrangement in which people agree to contribute a certain amount of money for a set period. The amount is deposited under an agreement, and after a specified period, is returned to the subscribers with interest.

Recent incidents:

17 September, 2025: A couple fled away collecting money from investors at Shamshabad. The RGIA police registered a case against them after a few investors made a complaint.

5 September 2025: A woman cheated around 200 investors to the tune of Rs 3 crore in a chit fund scam in Sanathnagar.

3 March 2025 : A couple allegedly duped investors to the tune of Rs 4.1 crore in the guise of deposits in illegal chit fund business at Chintal in Jeedimetla.

27 February 2025 : A chit fund owner has allegedly absconded after defrauding over 2,000 investors of more than Rs 100 crore in the city. Victims, primarily small workers, had invested their hard-earned money in chits.