With a host of chit funds operating in different parts of the country turning hostile towards their depositors, Jharkhand Governor Syed Ahmed expressed concern about people of the State, particularly the poor.
The Governor also invited banks to play more a positive role in protecting the hard-earned savings of vulnerable sections from going down the drain. Ahmed was speaking at the State level Bankers Committee (SlBC) meeting in the State capital on Thursday.
“Chit fund companies are working illegally and making false promises to the poor. They should beware these firms because it is this section which is bearing the brunt of such scams. Hullabaloo is created when something happens and after that, everything goes silent. The role of banks comes here, in improving reach and networking,” said the Governor.
A massive chit fund fraud has been recently unearthed in neighbouring Bengal. Even in Jharkhand, hundreds of such firms are in operation in semi-urban and rural areas. The Government had sealed 29 such companies, but the firms have moved high court. The court has put a moratorium on those non-banking firms from taking any fresh deposits or make new customers.
Reserve Bank of India regional director PK Jena also lauded the preemptive role played by the State in reining in erring non-banking firms. “The matter may be in court, but it has applied some brake on their careless functioning. There are also sufficient customer protection Acts in place, along with a Model Act. Jharkhand should also adopt this,” he said, calling on State bankers to improve penetration in rural areas so a larger section of the population can have access to financial inclusion.
Chief Secretary RS Sharma also underlined the role of banks in improving authentic financial activities in the interiors. “Banks consider the poor a liability, due to their low deposits. This does not improve financial inclusion at all. They can be profitable as well when you take banking facilities to their doorsteps. If they get easy access, they would also put in some money for rainy days into banks,” Sharma pointed out.
He also quoted an IMF report — suggesting the Direct Benefit Transfer mechanism can add to GDP growth by 0.5 per cent — to drive home his point on pilferage taking place in the name of subsidy.
later, Jena also pulled up banks for doing nothing after RBI had instructed at least one counter of a branch for exchanging damaged currency. “Banks should tell us what they have done about soiled notes and coin vending machines,” said the RBI regional director.