Capital market regulator SEBI today expressed serious concern over the mushrooming growth of chit funds in the country,especially in the eastern region,and said strong action was needed to curb their activities.
“The type of promises (some of) these companies are giving are such that no legitimate business activity can provide that sort of returns,” SEBI Chairman U K Sinha said.
“We have initiated proceedings against some of these companies and investigations are being made. In some cases interim orders have also been given. But these firms are then going to courts to seek relief,” Sinha told a CII interaction here.
Sinha said that large number of people are subscribing to such schemes that are risky. “These companies are taking advantage of the loopholes in the law,” he said.
“We have requested the government to come up with a new set of laws providing for a single regulator for these companies,” he said. Sebi chief declined to comment when asked about the Sahara issue.