RBI Governor Subbarao said the State Governments should be more vigilant and take prompt action against multi-level marketing by chit funds, which mobilise public money.

“Chit funds are into multi-level marketing and the responsibility of checking and prosecuting them is with the State Government. RBI does not regulate chit fund firms,” Subbarao said at a press meet post the central banks’ board meeting and a meeting with the representatives of State Level Bankers’ committee here today. West Bengal Finance Minister Amit Mitra was also present at the SLBC meeting.

Reserve Bank, on its part, has already written to the various State Governments asking them to be vigilant against such companies. “We have also been running training sessions for the police department and officials to help them put a check on this,” he said.

While mobilisation of public deposits by chit fund companies has been taking place in most States across the country, chit funds is a highly flourishing business in West Bengal. According to RBI sources, 24 Parganas (north & south), Hooghly, Malda and Midnapore are some of the districts worst affected by the rampant mushrooming of such chit fund operators.

shobha.roy@thehindu.co.in

(This article was published on December 6, 2012)
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