Govt to bring law to regulate chit funds, says Arun Jaitley in Lok Sabha

"The proposed legislation has begun and it will be ensured that the registered chit fund companies operate. The companies will be required to maintain transparency and will have to chalk out disclosure guidelines".

Image Arun Jaitely: File photo

New Delhi: In order to regulate chit fund schemes, the central government is preparing to bring a law, Arun Jaitley told the Lok Sabha on Thursday. The proposed legislation will strengthen existing rules to shield investors from fraudulent companies. The chit fund scheme, which is a saving and investment instrument, has been used to cheat lakhs of poor across the country since the 1980s. In Lok Sabha, finance minister Arun Jaitley talked about SEBI and its role of looking into the existing chit fund cases. He said that though there are state laws to deal with them in Bengal and Odisha, what about those who run operations throughout the country. He informed that the government is drafting a central law and very soon it will be brought up to the fore. Reportedly, the proposed legislation has begun and it will be ensured that the registered chit fund companies operate. The companies will be required to maintain transparency and will have to chalk out disclosure guidelines. During the last budget, Jaitley announced that the government would amend the Multi-state Cooperative Act which will protect the poor from dubious schemes. Since 1980, over a lakh of investors in West Bengal have come under the lime light. The recent Saradha and Rose Valley scams exposed the alleged nexus between fraudulent companies and politicians. According to the All India Association of Chit Funds, there are over 30,000 registered chit fund companies operating in the country but the unregistered ones are hundred times more than this. It was further informed that the center is discussing the issue with the RBI and SEBI. Both the bodies are strategizing on how to make laws stronger to penalize and prevent frauds.