RBI sets up mkt intel units to fight ponzis

  • Sanjib Kr Baruah, Hindustan Times, New Delhi
  • Updated: Nov 26, 2014 23:02 IST

In a move geared to combat shadow banking through increased vigilance and intelligence gathering, the Reserve Bank of India (RBI) in a recent organisational revamp, has set up market intelligence (MI) units across 16 out of 19 regional offices across the country.

“In order to gather intelligence on fraudulent individuals and companies, the RBI has recently set up MI units across India in 16 regional offices under the non-banking supervision divisions of RBI’s central office,” said a top official on condition of anonymity. “The latest effort is to address the pockets of non-regulated financial activities often camouflaged and hybrid that go unnoticed.”

Confirming the development, the RBI spokesperson did not add more to it.

The new development comes in the aftermath of several ponzi-like schemes including the Saradha financial scam that have fleeced the public in recent years resulting in an increasing clamour for a stronger role on part of the RBI.

Shadow banking is the banking-like activity by non-banking finance companies (NBFC), which remain outside the regulatory framework. They operate as intermediaries between investors and the borrowers, providing much-needed liquidity in the system.

Last year, a panel of economic intelligence agencies had expressed apprehension over the fact that of the estimated 30,000 NBFCs in the country, about 25,000 are not registered with RBI.

In recent years, many NBFCs have defrauded investors in the name of emus, plantations, and pyramid formations which experts say fall under India’s rapidly growing unregulated “shadow banking” area.

In August this year, a regulatory body comprising officials from the RBI, Sebi, Central Economic Intelligence Bureau and the National Housing Bank was set up to find out the volume of money in shadow banks, who the investors were etc.

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