Parliamentary panel for single regulator to monitor chit funds

The panel asked the finance ministry to submit a written reply on operations of such investment schemes in the country and the preventive actions taken by it.

Written by Express News Service | New Delhi | Published: May 18, 2013 3:21 am

Against the backdrop of the recent chit fund controversy in West Bengal,the Parliamentary Standing Committee on Finance,which has scrutinised the functioning of such schemes,has supported the concept of a “single law and a single regulator” to tackle the menace.

The panel asked the finance ministry to submit a written reply on operations of such investment schemes in the country and the preventive actions taken by it.

The panel has also called Reserve Bank of India (RBI) representatives on May 24 to discuss the issue at length. Similarly,the committee would meet Securities and Exchange Board of India (Sebi) representatives on May 31.

Senior officials from the RBI,Sebi,Central Board of Direct Taxes (CBDT) and the corporate affairs and finance ministries,who appeared before the committee,admitted poor coordination and lack of regulation to control the flourishing chit fund business in the country.

Committee chairman and BJP leader Yashwant Sinha suggested that the 1982 Act regulating the chit fund business in the country be repealed through an ordinance,sources said.

He was of the view that the chit fund business should be scrapped to protect innocent investors.

While most members,across party lines,supported his idea,others said repealing the Act would not ensure that chit fund companies stop functioning. The members were unanimous that there should be a “single law and a single regulator” to deal with such schemes,sources said.

The meeting was called in the backdrop of the collapse of the Saradha Group that had duped lakhs of investors of their savings totalling thousands of crores of rupees.

Among those who attended the meeting were department of economic affairs secretary Arvind Mayaram,secretary,financial services Rajiv Takru,corporate affairs secretary Naved Masood,CBDT chairperson Poonam Kishore Saxena and an executive director of RBI.

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