Bihar finance minister Abdul Bari Siddiqui has advised state ministers and members of legislative assembly not to attend functions organised by chit fund companies and non-banking financial companies (NBFCs) with doubtful credentials.
“If such companies invite you, avoid it. They tend to use your presence to boost their credibility, which helps in drawing innocent investors,” Siddiqui said on Thursday while piloting a legislation which proposes to strengthen mechanism for protection of depositors’ interests by reining in mushrooming chit fund companies and non-banking financial companies (NBFCs).
The assembly later adopted the Bihar protection of interest of depositors (in financial establishments) (amendment) Bill, 2017, by voice vote .
Siddiqui said in cases of fraud by chit fund companies or NBFCs, a DSP or inspector rank officer would be entrusted with the responsibility of investigation.
“If the accused chit fund companies or NBFCs refund depositors’ money with interest, the cases against them could be dropped. In case depositors’ money is not recovered even after attachment of property, the new Bill has provision for fine to realise the remaining money,” he added.
BJP leaders Prem Kumar and Vijay Kumar Sinha, however, wanted that the officials responsible for giving licence to fly-by-night operators should also face action. “These companies target poor and vanish with their hard-earned money. The Bill is a good initiative, but it should yield concrete results to protect the poor,” he added.
Kumar, who is also the leader of opposition in assembly, said a house committee had also submitted its report on mushrooming chit fund companies in the past, but no action was taken. “There have been several instances of chit fund companies disappearing with money,” he added.
Siddiqui said it was a model Bill to protect the interest of depositors. “The licencing authority for NBFCs is the RBI, but they are required to inform the concerned district magistrates before starting their operation, which they often don’t do,” he added.