States should also improve oversight of chit funds: Economic Affairs Secretary

MUMBAI: The Finance Ministry today said it was looking at ways to regulate chit fund and other related companies but wanted the states also to strengthen their oversight in this regard.

"There is a need for regulating chit funds in some manner. How that will be done is not something that I can say now because there is no decision on it," Economic Affairs Secretary Arvind Mayaram told reporters here when asked if the government was planning to have a separate regulator for chit funds.

He said the government was "thinking extensively" on the subject and 'we will have to wait for the final outcome'.

Mayaram, however, also pointed out that chit funds being a state subject, there are state laws governing them.

He also said many states do not have regulators who can focus on the activity of chit funds and other investment agencies.

There is an urgent need for states to strengthen their oversight of all these activities, he said.

His comments come within days of investigation against Saradha group over alleged defrauding of investors by the Kolkata-based entity.

According to the All-India Association of Chit Funds, there are more than 10,000 chit fund companies registered with the government, transacting business worth over Rs 30,000 crore per annum.