Wednesday, February 21, 2024

Chit funds tamed in Tripura; deposits rise by 150 per cent

With illegal chit fund organisations and NBFCs tamed in Tripura, deposits in small savings rose by 150 per cent in four years in the state, a Minister said here on Tuesday.
“Following a series of steps to rein in rogue chit fund organisations and NBFCs, deposits in various small savings schemes rose by 150 per cent in four years in Tripura,” state Finance and Information Minister Bhanulal Saha told IANS.
He said: “During 2011-12, gross deposits in small savings schemes were Rs 548 crore and in the last financial year (2015-16), the deposits rose to Rs 1,370 crore. 
“In the current fiscal (2016-17) up to August, gross deposits were Rs 929 crore and they might cross Rs 2,000 crore at the end of the financial year.”
“If the central government had not reduced the interest rate in various small savings schemes, the deposits would be much higher,” Saha opined.
A top official of the Tripura Institutional Finance Department said there would have been more deposits in the small savings schemes had the post offices not lacked infrastructure and manpower.
Saha said Tripura would allow chit fund organisations and non-banking financial companies (NBFCs) to operate only if they were registered and recognised.
To further tighten the noose on illegal financial organisations, the Protection of Interest of Depositors (Financial Establishment) Second Amendment Bill was presented in the winter session of the Tripura assembly.
However, it was withdrawn on Monday due to some loopholes pointed out by the opposition Congress and Trinamool Congress members.
Chief Minister Manik Sarkar told the house on Monday: “We are withdrawing the bill to plug all loopholes in it. It would be presented in the assembly again to tighten the existing act against the illegal chit fund organisations and unauthorised NBFCs.”
Sarkar, who holds the home portfolio also, said that his government, on the advice of the Tripura High Court, had formed a special investigating team (SIT) to probe rogue finance bodies.
NBFCs or chit fund companies which are not recognised by the Reserve Bank of India (RBI), the Insurance Regulatory Development Authority (IRDA) or the Securities and Exchange Board of India (SEBI), cannot conduct any monetary business or take deposits from people.
The Chief Minister said Tripura is the first state in the country to have enacted the act in 2000 and amended it first in 2011 to curb the activities of illegal chit funds and NBFCs.
He said his government had asked the Centre and the RBI for regulating the activities of illegal NBFCs and chit fund groups. “Unfortunately”, no response was received, he claimed.
“We have taken a series of actions against these bodies and referred 37 cases relating to illegal financial activities to the Central Bureau of Investigation. However, the CBI is investigating only five of the 37 cases,” Sarkar said.
The opposition Congress, Trinamool Congress and the Bharatiya Janata Party have accused the ruling Communist Party of India-Marxist (CPI-M) leaders and members of involvement with chit fund groups, but the Left has strongly denied the charge.
Unauthorised chit fund companies and NBFCs mushroomed in the northeastern region in recent years.
They lure depositors by promising exceptionally hefty rates of interest ranging from 25-30 per cent. After collecting the money, they quietly shut down their operations and vanish.

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