Law to choke chit funds on way

New Delhi, Aug. 3: A central law to snuff out chit funds that operate in multiple states is in the offing.

Finance minister Arun Jaitley today told Parliament that the government was drafting a central law as pan-India rules were necessary to supplement the existing state laws against the chit funds.

He was replying to a debate on the Banking Regulation (Amendment) Bill, 2017 in the Lok Sabha.

The bill will replace an ordinance that authorised the RBI to start insolvency proceedings. It was passed by the Lok Sabha after rejecting a statutory resolution against the ordinance moved by a Congress member.

“We are bringing out a draft central law for chit fund companies that operate in more than one state, which will be placed in the House for discussion,” Jaitley said, adding individual state governments had their own laws to deal with such companies operating within their jurisdictions.

During the debate on the banking bill, opposition members had raised the issue of chit funds that had duped investors and sought to know from the government what steps it was planning to deal with this malaise.

“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

Read more at:the telegraph