"It is the responsibility of the government and the regulators to protect people from such fraudulent schemes," said Subbarao, who demits office in a week's time.
He was speaking at the Reserve Bank headquarters here ahead of the presentation of Rajbhasha shields to commercial banks and other financial institutions.
Subbarao suggested a two-pronged approach: spreading awareness about dubiousness of such schemes among the investors, and deepening financial inclusion so that the common people's savings are routed to the formal financial system.
The outgoing RBI governor also said that financial inclusion and financial literacy are among the top priorities for the central bank.
He said RBI as well as the government have been running advertising campaigns in Hindi and regional languages, and have requested banks to help in these efforts.
Recently, the high-profile Saradha Group in West Bengal went bust, putting the hard-earned money of thousands of investors in jeopardy.
The incident has triggered an intense debate over how to regulate chit funds.