The decision by the EIRC was made in the recent wake of the chit fund scams in West Bengal and the huge financial loses to the people of the state.
Ranjeet Kr Agarwal, Chairman EIRC, said, "We are preparing a comprehensive research paper that will have the list of all financial institutions, both banking and non-banking, operating in the state."
Agarwal said, "The document will also have advisories on how to regulate their activities and recommend how general people can be sensitized about investing."
He said, "The work has already started and it will take two more months to complete the document. We hope to submit it before Chief Minister Mamata Banerjee by December end."
"We will take into account NBFC, HFC, Chit Funds, MFI, CIS, NIDHI, Mutual Benefit Companies and also ancient money lending activities. This can be a expansive data for the government to operate on," the EIRC Chairman said.
Kishore Periyar, Deputy General Manager, DNBS, Reserve Bank of India, said, "Over the last two years RBI has undertaken grassroots level sensitization programme in the mother tongue where police officers, consumer welfare officers, district level officials of directorate of small savings are being educated on how the common people should be educated about investment. After all one rupee saved is one rupee earned."
Periyar went on to add that the Reserve Bank of India (RBI) Rural Planning Department has started a new programme called 'Raju and Money' which is run in all village gathering like fairs and weekly bazaar.
"Besides this RBI is continuously in touch with Urban Bank Department and advise people not to invest in companies about which they don't understand," he said.
RBI has simple regulations, according to Periyar, which are a maximum interest of 12.5 percent with no gifts in addition and finally the schemes can't be less than a year and more than five years.
He also added that there are no chit fund companies registered under RBI in West Bengal though over 76 of them operate in the state.
In recent chit fund scandal in Eastern India, close to 1.7 million investors have lost their hard earned money.
The company in question is set to have run wide variety of Collective Investment Schemes (CIS) in Eastern India.
It is a clear case of disguised ponzi scheme where the company frequently changed its nature of investments and offers, while the investors never knew the exact nature of investments made by the company.
Rajkumar Adukia, Chairman, Committee of Financial Market and Investor protection, ICAI said, "Time and again small time investors fall prey to fanciful returns promised by Ponzi scheme operators sending warning signals to the regulators professional and investors."
Adukia added, "We suggest three simple steps to identify the legality of a chit fund company under the Chit Fund Act 1982."
"The companies need to registered with the Registrar of Chits, should have a Chit Agreement and a Fixed deposit with the Registrar of Chits which should be visible," he said.
He said that any company that operates within this ambit is by Sec XI of the ACT liable to maintain the above procedures failing which it is a cognizable offence.
--IBNS (Posted on 26-10-2013)