House panel for single regulator to monitor chit fund schemes

Written by fe Bureau | New Delhi | Updated: May 18 2013, 08:48am hrs
The Parliamentary Standing Committee on Finance, which closely scrutinised the functioning of chit fund schemes, has supported the concept of a single law and a single regulator to tackle the menace of chit funds.

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

The panel has called RBI representatives on May 24 to discuss the issue at length. Similarly, the committee would meet SEBI representatives on May 31.

Senior officials from the RBI, CBDT, SEBI 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chairman and BJP leader Yashwant Sinha suggested that the 1982 Act regulating the chit fund business in the country be repealed through an ordinance, sources said.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 hard-earned savings totalling thousands of crores of rupees.