The finance standing committee of Parliament is likely to recommend scrapping of the Chit Fund Act, 1982, as the existing web of state and central regulations is so porous that preventing a Saradha-type scam was next to impossible.
After hearing finance, tax and stock market officials on Friday, committee chair Yashwant Sinha is understood to have been in favour of doing away with the law altogether so that chit funds were deemed illegal.
Sinha along with some other committee members like CPI's Gurudas Dasgupta felt efforts must be made to ensure people who currently turn to chit funds due to lack of options are provided more trustworthy investment avenues. However, Congress's Sanjay Nirupamasked for doing away with chit funds, saying that there are now enough financial instruments available.
Senior officials like economic affairs secretary Arvind Mayaram pointed to the problem of multiple regulators and lack of coordination between the Centre and states that allowed unscrupulous chit funds from taking investors for a ride.
MPs felt lack of banking services in many parts of the country, particularly in rural areas, helped chit funds present themselves as an attractive proposition with promise of high returns acting as bait.
Dasgupta is understood to have suggested widening the reach of options like postal savings to provide the economically vulnerable a safer bet instead of dubious chit funds.
BJD's Bhartruhari Mahtab is learnt to have argued that existing laws must be made more stringent and all efforts be made to ensure that those guilty of scams like the Saradha case received exemplary punishment.
Trinamool Congress's Sudip Bandyopadhyay is understood to have said the state government could not be held responsible for chit fund scams, while Dasgupta said the money investors lost was unlikely to be recovered.
While not all committee members are likely to support Sinha's view — which he said in his personal capacity — the panel's report could recommend drastic measures as the former finance minister felt chit funds are inherently risky.
Sources said the sentiment expressed by many MPs was that it will be hard to prevent gullible investors, particularly those from the economically less well-off sections, from falling for tempting chit fund offers.
The committee also briefly discussed its long pending report on defining the below poverty line population with members disagreeing on inclusion and exclusion norms.
After hearing finance, tax and stock market officials on Friday, committee chair Yashwant Sinha is understood to have been in favour of doing away with the law altogether so that chit funds were deemed illegal.
Sinha along with some other committee members like CPI's Gurudas Dasgupta felt efforts must be made to ensure people who currently turn to chit funds due to lack of options are provided more trustworthy investment avenues. However, Congress's Sanjay Nirupamasked for doing away with chit funds, saying that there are now enough financial instruments available.
Senior officials like economic affairs secretary Arvind Mayaram pointed to the problem of multiple regulators and lack of coordination between the Centre and states that allowed unscrupulous chit funds from taking investors for a ride.
MPs felt lack of banking services in many parts of the country, particularly in rural areas, helped chit funds present themselves as an attractive proposition with promise of high returns acting as bait.
Dasgupta is understood to have suggested widening the reach of options like postal savings to provide the economically vulnerable a safer bet instead of dubious chit funds.
BJD's Bhartruhari Mahtab is learnt to have argued that existing laws must be made more stringent and all efforts be made to ensure that those guilty of scams like the Saradha case received exemplary punishment.
Trinamool Congress's Sudip Bandyopadhyay is understood to have said the state government could not be held responsible for chit fund scams, while Dasgupta said the money investors lost was unlikely to be recovered.
While not all committee members are likely to support Sinha's view — which he said in his personal capacity — the panel's report could recommend drastic measures as the former finance minister felt chit funds are inherently risky.
Sources said the sentiment expressed by many MPs was that it will be hard to prevent gullible investors, particularly those from the economically less well-off sections, from falling for tempting chit fund offers.
The committee also briefly discussed its long pending report on defining the below poverty line population with members disagreeing on inclusion and exclusion norms.
Source:-The Times of India
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