The ministry of corporate affairs (MCA) may soon float a discussion paper aimed at creating a ?single-law- single-regulator? system to monitor and regulate the activities of all the chit fund companies.
Sources said the MCA is also looking at putting in place a mechanism that will enhance coordination between various authorities ? both central and state ? for quick redressal of chit fund-related complaints.
“The idea is to protect small investors who are duped of their life savings but such entities. Right now, we are looking at all options. There is an inter-ministerial group also deliberating on the subject. We will need to consult with everyone. I wrote to the chief ministers of most states in February regarding the chit fund issue too. We may take up certain suggestions coming our way,” MCA minister Sachin Pilot told FE on the sidelines of the annual day of the fair trade regulator.
According to sources, the MCA has already drafted a note on the options for better regulation of the chit fund companies. It is expected to seek the views of all relevant ministries on creating a single regulator to tackle the chit fund entities,” a senior official said.
The parliamentary standing committee on finance, which closely scrutinised the functioning of chit fund schemes, has already supported a “single law and a single regulator” to tackle the menace of chit funds. Last week, the Parliamentary panel instructed the finance ministry officials to submit a written reply on the operation of such investment schemes in the country and preventive actions taken by them so far.
The panel has called the RBI representatives on May 24 to the discuss the issue at length. Similarly the committee would meet the representatives of the market regulator on May 31.
Last week, senior officials from RBI, CBDT, Sebi, MCA and the finance ministry appeared before the committee and admitted poor coordination and lack of regulation to control the flourishing chit fund business in the country.
