To come out with new ordinance to rein in chit funds, says Mamata Banerjee

Following the collapse of the Saradha Group, which operated Ponzi schemes, the West Bengal Government plans to come out with an ordinance to rein in chit funds.

The Mamata Banerjee-led Government also plans to set up a Commission, headed by retired Justice Shayamal Sen, to probe the issue.

This apart, a special investigation team (SIT) will be constituted under the Director-General of Police.

Claiming innocence to the existence and operations of such chit fund companies in the State, Chief Minister Mamata Banerjee said on Monday that the chit funds were monitored by the Centre, and the State Government has little knowledge about the existence of such companies.

“It (chit fund) is the Centre’s subject. Which companies were given permission by them and which were not, the State Government cannot know,” she said after a high-power committee meeting at the Writers’ Buildings here.

Bill to be withdrawn

According to Banerjee, the Centre has to first withdraw the current Bill, which was framed by the previous Left Front government, so that her Government could come out with a fresh ordinance.

“The Bill had several loopholes and did not include provisions for search and seizure, among others. However, unless the earlier Bill is withdrawn we cannot come out with an ordinance,” she said.

The State Government has already prepared the draft of the ordinance, in which it has tried to plug the loopholes by including provisions for search and seizure; stringent actions against errant companies; and providing protection to investors’ money.

“SEBI (Securities and Exchange Board of India) had written a letter to us about three months back asking us to look into the affairs of one such company.

“We then asked the Centre to send the Bill back so that we can come out with a stronger law,” she said.

However, according Bikash Ranjan Bhattacharya, a senior advocate of Kolkata High Court, the State is free to issue an ordinance immediately. “It (passing of an ordinance) does not require the withdrawal of the current Bill by the Centre,” he said.

(This article was published on April 22, 2013)
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