RBI Governor briefs Parliament panel over chit-fund scam

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RBI Governor D Subbarao has briefed a Parliamentary panel on regulatory issues concerning the recent chit-fund scam in West Bengal and discussed steps that could be taken to prevent recurrence of such frauds.

According to sources, Subbarao informed the members of the Parliamentary Standing Committee on Finance about the limitation of the central bank in regulating all deposit taking entities.

The RBI chief is understood to have agreed to the idea of launching a massive campaign to spread financial literacy and dissuade investors from falling prey to fraudulent companies which offer unreasonably high returns on investments.

On the issue of former RBI officers joining such financial companies, Subbarao said he will discuss the issue and get back to the panel. The issue was raised by panel member and CPI leader Gurudas Dasgupta.

RBI is likely to give a written reply to issues raised by the members in connection with the chit-fund scam.

The Standing Committee, which is headed by the senior BJP leader and former finance minister Yashwant Sinha, is scheduled to call Sebi Chairman U K Sinha for discussion on the issue next week.

At its last meeting, the panel had deliberated on the need for a single regulator to oversee the functioning of such companies which seek deposit from public.

This was the second meeting of the panel, held against 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.


Read more about: rbi, chit fund scam
Story first published: Saturday, May 25, 2013, 18:52 [IST]
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