Bengal’s savings scheme in doubt
With the Reserve Bank of India (RBI) unwilling to allow non-banking financial entities to accept public deposits, the much-hyped savings scheme of the Bengal government proposed by chief minister Mamata Banerjee, has been thrown into uncertainty.
The state finance department too is aware of the likely hurdles to launching the scheme and has hence has made little progress towards finalising the draft of the proposed scheme despite the grand announcement by the chief minister last month. The savings scheme proposed in the wake of the chit fund scam, is tipped to provide people a safe platform to park their savings, as opposed to falling for lucrative schemes floated by ponzi or dubious chit fund units.
On the day she proposed the scheme, the chief minister said the details would be posted on the official portal of the state finance department for ready reference by the people. She said her government would soon roll the process of drafting the contours of the proposed scheme. However, sources in the state finance department confessed to the delay in rolling out the proposed new scheme despite the passage of a couple of months since the chief minister’s grand announcement.
There are two reasons for the delay in rolling out the scheme. Firstly, the RBI recently made it clear that it would not allow any non-banking entity to venture into deposit raising scheme, thereby making it impossible for the apex bank to consent to our scheme. Secondly, the feedback we received on the scheme were largely negative and many experts contested the financial viability of the proposed venture,” said a senior finance department official.
RBI governor D Subbarao had in a recent statement made a strong case for minimising and doing away with the system of non-banking entities accepting deposits. “Only banking entities operating under a highly regulated system, would continue to be in the deposit-mobilisation business in future,” Subbarao had been quoted as saying.
Quizzed on Subbarao’s remarks, a senior RBI official from Mumbai said that while the apex bank would not shut down all non- banking entities that are currently into the deposit mobilisation business, it would not grant sanctions to fresh applications from new non-banking units going into similar ventures. Without an RBI nod, government is unlikely to roll the scheme any time soon. And in what further compounds the fate of the proposed new scheme, the RBI had lately barred the West Bengal Industrial Development Corporation (WBIDC) and West Bengal Industrial Development Finance Corporation (WBIDFC) from accepting public deposits. The apex bank further directed these two state-run entities to not turn into non-banking entities.
“It is a strange irony that while the government wants to float its own scheme in the wake of the chit fund scam and stop gullible depositors from falling for the lure of bogus schemes, the RBI wants to safeguard public savings by refusing sanction to non-banking units seeking to venture into deposit mobilisation. However, with the RBI being the apex bank, its decision will be binding on the state government,” the RBI official said.