Thursday, April 25, 2013

Regulating chit funds state responsibility, feels MCA

Ministry likely to lay out facts on chit fundsEven as the Saradha Group chit fund scam is fast unfolding, the corporate affairs ministry believes the responsibility of regulating chit fund entities lies with the respective state governments. The ministry is holding a high-level meeting on Thursday in which the Registrar of Companies (RoC) Kolkata and Shillong among others would chalk out the next course of action for another 60-odd entities involved in chit funds or ponzi schemes in the region.

“MCA may order RoC scrutiny of half-a-dozen entities belonging to the Saradha Group and over two dozens other chit fund entities based in Kolkata. SFIO may also be roped in the matter,” said a senior government official familiar with the matter.

MCA move comes within two days of West Bengal chief minister Mamata Banerjee attributing the Saradha Group scam on the Centre. Banerjee had said on Tuesday chit funds were controlled by the Centre and it failed to ensure a law that adequately protected the investors.

On its part, MCA is expected to refute these allegations and present the facts regarding the implementation of the Prize Chit Money Circulation Banning Act, 1978. As per the provisions of the Act, the power to make rules lies with the state government which by notification in consultation with the Reserve Bank of India (RBI) can make rules for carrying out the law. Also, MCA is expected to give a detail background along with timeline of how and when the Saradha Group companies came under the RBI and Sebi scanner, sources said. Corporate affairs minister Sachin Pilot said, “I do not wish to get drawn into a debate with anyone. But the facts speak for themselves. I am taking up the matter on Thursday.”

According to sources, MCA in September, last year, had reported at least 62 dubious chit fund companies were operating in West Bengal that had amassed nearly R20,000 crore. Sebi had written to the West Bengal government seeking details of these companies specially those having direct linkages to media businesses.

In 2011, Sebi had passed an order against Rose Valley not to collect any money from investors or to launch any scheme.

The company was offering an amalgam of insurance and small savings schemes promising high returns as it expanded into hotels, tourism, food and an entertainment and news channel business.

Other prominent groups that were under RBI and Sebi scanner included Saradha Group, Rice Group, Shine Group, Chakra Group and the Tower Group among others, sources said.
Ashish Sinha: New Delhi, Apr 25 2013, 01:28 IST

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