Modi government will soon bring law to deal with chit funds, says Arun Jaitley

By: | Published: August 4, 2017 1:28 PM

Following its electoral mandate to wipe out corruption, the Modi government is drafting a cental law to deal with chit funds, Union Finance Minister Arun Jaitley said yesterday.

FINANCE MINISTER ARUN JAITLEY, FINANCE MINISTER ARUN JAITLEY CHIT FUND LAW, FINANCE MINISTER ARUN JAITLEY 2017 NEWS, CHIT FUND NEWSJaitley also assured the house that the Reserve Bank of India will begin the process of resolving bad loans. (PTI)

Following its electoral mandate to wipe out corruption, the Modi government is drafting a cental law to deal with chit funds, Union Finance Minister Arun Jaitley said yesterday. “SEBI is looking into the existing chit fund cases. There are state laws to deal with them in Bengal and Odisha. But what to do with those who run operations throughout the country? We are drafting a central law and very soon we will bring it before you,” Jaitley said in Lok Sabha, as per Indian Express. He was replying to a debate on the Banking Regulation (Amendment) Bill 2017. Earlier in the debate, the opposition asked what steps will the government take to deal with chit funds. The finance minister also pointed out that investors were attracted to chit fund schemes as it offered nearly 1-1.5% interest higher than the nationalised banks. He said government had launched much safer investment options like the LIC’s Pension Scheme, which apparently seems to counter the chit funds. He added that at a time when inflation was running high at 10%, bank deposit rates were high at 9%.

Jaitley also assured the house that the Reserve Bank of India will begin the process of resolving bad loans. The finance minister also admitted to the fact that public sector banks which try to address nonperforming assets face the anxiety of being questioned by investigating agencies later, the report added. Lok Sabha, yesterday passed the Banking Regulation (Amendment) Bill, 2017, empowering RBI to issue directions to banks to initiate insolvency proceedings against loan defaulters. Earlier, Jaitley during the budget session, had also promised to protect investors by amending the Multi-state Cooperative Act.

Asking the parties to rise above political differences and address the issue of nonperforming assets, Jaitley said the RBI, which has identified 12 large loan defaulters who account for 25% of all bad loans, may refer more cases to the banks to initiate insolvency proceedings. He also added that certain provisions of the Prevention of Corruption Act are deterring banks from taking honest decisions. Crores of rupees were looted in the infamous Rose Valley chit fund scam which is allegedly over Rs 17,000 crore and the ED had recently attached Rs 300 crore worth of assets of the Rose Valley group for alleged money laundering, as per PTI.

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