The State Government and Reserve Bank of India, Patna circle, are likely to roll out a slew of measures to control, regulate and defang Non-banking Financial Companies (NBFCs) operating in Jharkhand, especially after chit fund scams reported from elsewhere stunned petty investors who are easy prey for companies operating in the sector.
The decision was taken at the 16th meeting of State level Co-ordination Committee here on Monday. There are 16 NBFCs of different categories operating in Jharkhand, said sources in RBI, and regulation as a means to ensure prevention of investment has so far seen very few coordinated actions in Jharkhand.
In Monday’s meeting between representatives of RBI and Chief Secretary Sajal Chakraverty besides other senior Government functionaries of Jharkhand, the issue of absent regulatory mechanism was discussed and to address the need it was decided to expedite creation of Registrar of Chits in Jharkhand under the Chit Funds Act and also to frame rules under the Protection of Interest of Depositors Act of 2011.
“We have shown the Chief Secretary the copy of the notification to setup Registrar of Chits in Bihar and requested him to take action accordingly,” said Regional Director of RBI Patna, MK Verma. An official of the RBI confided that the State Government has assured of giving final shape to the rules under the PID Act and will also issue notification on a ‘Competent Authority’ under the Act to regulate NBFCs working in different districts of Jharkhand. The State Government is likely to consult Jharkhand High Court for setting up designated courts under the PID Act.
Other measures decided at the joint meeting focuses heavily on dissemination of information and fact finding about companies operating under the sphere of NBFCs. Officials of the central bank and State Government decided to float a dedicated website for SlCC and all the regulators will provide customer related information on the portal; verifying information about Directors under prosecution the information of which is available at website of Ministry of Corporate Affairs before granting license to operate; forming three sub-committees of officials of State and regulatory bodies; organising workshop for Government officials at the grass-root level for dissemination of information; public advertisements from Jharkhand Government; nominating nodal contact persons and setting up market intelligence units to strengthen information sharing for prompt action against unlawful fund collection.
The Chief Secretary stressed upon awareness drive in rural areas where financial illiteracy leads an investor in the trap laid by NBFCs. According to RBI, NBFCs cannot take investment for a period of less than one-year and beyond five years. An NBFC cannot give interest beyond 12.5 per cent on the amount of investment.
“Efforts should be made to sensitise people at the level of blocks, panchayats and circle through awareness drive. Important information should also be disseminated by public relations department,” said Chakravorty. Notably, the six sub-committees to be constituted will be—Sub-committee of SlCC headed by Principal Secretary Finance to monitor the NBFC related issues during the period intervening the SlCC meetings, Training Sub-committee headed by Additional Director General Of Police-CID to monitor training of law Enforcement Agencies dealing with NBFC sector, Public Awareness Committee headed by Secretary, IPRD to take care of public awareness.
The meeting was attended by Additional CS, NN Pandey; Principal Secretary, Institutional Finance, Mridula Sinha; ADG-CID, SN Pradhan; Secretary IPRD, MR Meena and GM RBI Ranchi, Saurav Sinha.