Plugging legal gaps to check chit fund scams,says Sachin Pilot

Pilot said chit funds were a state subject and their monitoring was the responsibility of the state.

Admitting that a number of complaints pertaining to chit fund frauds have been received from Maharashtra,Union Minister for Corporate Affairs Sachin Pilot said Monday that necessary amendments were being made to the law to prevent such scams in the future.

Pilot said a committee consisting of the Reserve Bank of India,Ministry of Corporate Affairs and Securities Exchange Board of India has suggested a number of amendments that will plug loopholes that are currently allow such frauds to take place.

Speaking after the Youth Parliament function organised by South Mumbai MP Milind Deora in Bombay Stock Exchange office on Monday,Pilot said chit funds were a state subject and their monitoring was the responsibility of the state.

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We have formed a committee with the RBI,MCA and SEBI as we do not want any gaps in law. An amendment is being brought in to take action against illegal chit fund operations so that the investors money can be retrieved and returned and such incidents of ponzi schemes are curtailed in the future, said Pilot.

Speaking about Kolkata-based Saradha Groups chit fund scam,Pilot said that 54 companies had been named in the interim report submitted to the finance ministry. He added that small investors in nooks and corners of the country were not aware of the legal framework and they fell prey to ponzi chit fund scams because of lack of information.

The Investor Protection Fund money is being used to give out proper information on investments in regional language. Poor people invest in the wrong places and they need to be educated about capital markets. This will also boost the low retail investment in the country, he said.

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