No more unauthorised chit fund in Tripura: Minister

Agartala, Dec 15 (IANS) Tripura Finance Minister Bhanulal Saha on Thursday said the government will not allow any chit fund organisation and non-banking financial companies (NBFCs) to operate unless they are registered and recognised.

Saha, while tabling the Protection of Interest of Depositors (Financial Establishment) second amendment bill in the Tripura assembly, said: “The bill was brought to enhance the level of protection of the interests of depositors in financial establishments in Tripura by providing more teeth to the existing act.”

He said any chit fund organisation or an NBFC, before starting their operation or business in Tripura, must obtain trade licence from the appropriate authority, which also have to take approval from the concerned district magistrate and collector before issuing the licence.

“After getting the written application and papers from the chit fund organisation or NBFC, the concerned district magistrate and collector ask the concerned district superintendent of police have to enquire about the whereabouts, financial conditions, track-records of those chit fund body or NBFC,” the Minister told reporters.

NBFCs or chit fund companies which are not recognised by the Reserve Bank of India (RBI), the Insurance Regulatory Development Authority (IRDA) or the Securities and Exchange Board of India (SEBI), cannot conduct any monetary business or take deposits from people.

Saha said the Tripura government is the first state government in the country to have enacted the act in 2000 and amended it first in 2011 to curb the activities of illegal chit fund and NBFCs.

“The existing chit fund and NBFCs operating in the state also have to follow the same procedure when they try to renew their licences in future,” he added.

“Our Chief Minister, I and my predecessors and state Chief Secretary had written letters to the Prime Minister, Union Finance Minister and Reserve Bank Governor to regulate the activities of illegal NBFCs and chit fund groups,” the state Finance Minister added.

“We have taken a series of actions against these bodies and referred 37 cases relating to illegal activities of chit fund groups and unauthorised NBFCs to the Central Bureau of Investigation for appropriate action,” he said.

The opposition Congress, Trinamool Congress and the Bharatiya Janata Party have been accusing the ruling Communist Party of India-Marxist (CPI-M) leaders and members of involvement with chit fund groups, an accusation the Left has strongly denied.

Unauthorised chit fund companies and NBFCs have mushroomed in the northeastern region in recent years.

They lure depositors by promising exceptionally hefty rates of interest ranging from 25-30 per cent. After collecting the money, they quietly shut down their operations and vanish.