Seeking a law which would singularly deal with chit fund and multi-level-marketing (MlM) companies, a ministerial panel on Friday called upon the Reserve Bank of India (RBI) to play a more active role towards overseeing the registration of such entities and has called the central bank's Governor D Subbarao to brief it on the matter next week.
In a meeting called to discuss the fallout of the recent multi-crore Saradha Chit Fund scam, the Parliamentary Standing Committee on Finance summoned top officials of the Finance Ministry and reviewed the action taken by the Government in the matter amid a strong call for a complete ban on such schemes from its members.
According to sources, the panel which is headed by senior BJP leader Yashwant Sinha, asked the Finance Ministry officials as to what action has been taken against various such entities which were involved in MlM activities as well as seeking investment from subscribers.
The committee also sought to know as to what action the Government has taken to ensure that directors of around 600 entities against which action has been taken till date, won't go ahead and join other companies to avoid being punished.
Seeking a greater role to be played by the RBI, the panel, sources informed, was of the view that the central bank should directly be involved in the registration of chit fund and MlM companies.
This would prevent such companies from simply registering themselves with the Registrar of Companies (RoC) and start seeking deposits from investors. Tightening of registration norms would go a long way in putting a lid on their activities, panel members felt.
It was unanimously felt that a singular law governing operations of such companies would also prevent them from running amok with investors' valuable money.
Seeking to give RBI a greater role in governing such companies, the Parliamentary panel has decided to summon Subbarao in the next meeting scheduled for May 24.
The Committee examined the issue in the presence of top officials of finance ministry and corporate affairs ministry and representatives of SEBI, RBI, Enforcement Directorate and Central Board of Direct Taxes (CBDT).
Department of Economic Affairs Secretary Arvind Mayaram, Secretary in the Department of Financial Services Rajiv Takru, and Corporate Affairs Secretary Naved Masood were also present in the meeting.