Draft bill to check inter-state chit fund frauds soon: Jaitley

new delhi — The government has prepared a draft law to check frauds by chit fund companies which operate in more states than one, Finance Minister Arun Jaitley said in the Lok Sabha on Thursday. He also declared that criminal and recovery proceedings will be started against defaulters of bank loans who divert money.

“We are bringing out a draft central law for chit fund companies that operate in more than one state, which will be placed in the house for discussion,” Jaitley said, adding that individual state governments had their own laws to deal with such companies operating within the state.

Replying to the debate on the Banking Regulation (Amendment) Bill, 2017, the minister said that pension schemes for senior citizens run by the Life Insurance Corporation > Action will be taken against bank loan defaulters who divert money. > West Bengal, Odisha and Punjab have powers to regulate chit funds on their own. > The House also adopts the Banking Regulation (Amendment) Bill, 2017. (LIC) that provide 8% interest will dissuade people from putting their savings in chit funds.

Jaitley’s disclosure on the move to check chit funds comes against the backdrop of several chit fund companies duping people of millions of rupees in several states. The minister referred to states like West Bengal, Odisha and Punjab in the context of > The bill has provisions to empower the Reserve Bank of India. > The minister says pension schemes for senior citizens run by the Life Insurance Corporation that provide 8% interest will dissuade people from putting their savings in chit funds. states having powers to regulate chit funds on their own.

Earlier, members including Pappu Yadav of the RJD demanded strict measures to check the activities of chit funds.

After the minister’s reply, the House passed the Banking Regulation (Amendment) Bill, 2017, after rejecting a statutory resolution disapproving the ordinance moved by a Congress member.

Under the bill, the central government may authorise the Reserve Bank of India to issue directions to any banking company to initiate insolvency in respect of a default under the provision of the Insolvency and Bankruptcy Code.

It also has provisions empowering the Reserve Bank of India to issue directions to banks for resolution of stressed assets.

“Many NPA cases could be fraud, as money taken was diverted. These are not routine NPAs. Criminal proceedings will be carried out and bank will start recovery procedure for such accounts,” Jaitley said.

Speaking about the bill, Jaitley said that a company defaulting on loans cannot claim the right of equality in treatment as regards repaying the loans. —

Criminal proceedings against loan defaulters