Govt to bring law to protect chit-fund investors: Arun Jaitley

The government is drafting a central law to protect people investing in chit fund schemes and will bring the legislation very soon to Parliament, Finance Minister Arun Jaitley said on Thursday.

There is a need for a pan-India law to deal with chit fund schemes in addition to state laws which already exist, the minister said in the Lok Sabha while replying to a debate on The Banking Regulation (Amendment) Bill, 2017.

During the debate, Opposition members had raised the issue of chit funds due to which investors have been duped and sought to know from the government what steps it was planning to take to deal with the malaise.

"SEBI (Securities and Exchange Board of India) is looking into the existing chit fund cases. There are state laws to deal with them in Bengal and Odisha. But what to do with those who run operations throughout the country? We are drafting a central law and very soon we will bring it before you," Jaitley said.

Chit fund schemes typically attract investors by offering interest rates that are 1-1.5 per cent higher than what is given by banks. Jaitley had in the 2017-18 Budget announced that the government would amend the multi-state Cooperative Act to protect the poor from dubious chit fund schemes operated by unscrupulous entities. The government has taken steps to offer stable interest rates to investors so that they are not lured into chit fund schemes, he added.

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Jaitley also said that the state-owned LIC has launched a pension scheme for senior citizens which offers a fixed 8.3% interest rate on deposits.