Lok Sabha Question No. 1088 (UNSTARRED), answered on 2021-07-26
Subject: Chit Fund Companies
Ministry: FINANCE
Asked by: Bhavana Gawali (Patil), Omprakash Bhupalsinh alias Pawan Rajenimbalkar

## †1088 :

SHRIMATI BHAVANA PUNDALIKRAO GAWALI: SHRI OMPRAKASH BHUPALSINH alias PAWAN RAJENIMBALKAR: : :

Will the Minister of FINANCE be pleased to state:

- (a)  whether the Government is aware that a large number of chit fund companies are running in the country and if so, the action taken by the Government in this regard;
- (b)  the details and number of cases which have come to the notice of the Government from the year 2012 to till date;
- (c)  whether  the  Government  is  aware  that  the  company  named  Financial  Health  Care  Services Limited  which  had  several  branches  all  over  the  country  including  its  four  branches  in Osmanabad has vanished away with the money of investors and has been closed in the year 2015 and if so, the details thereof;
- (d)  whether the Government has conducted an investigation into it and if so, the details thereof; and
- (e)  the  action taken  by  the Government  to  return  the  money  of  investors of  this  company  to  their families?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (DR. BHAGWAT KISHANRAO KARAD)

(a): Chit  Funds  are  regulated  under  the  Chit  Funds  Act,  1982.  Chit  Fund  companies  legitimately conduct their business under the respective State Governments after obtaining registration from the Registrars of Chits in the respective States / UTs. The Chit Funds Act, 1982 contains detailed penal provisions for any contravention of the Act, including offences committed by companies, for which the Act empowers the respective Registrars to take action.

(b): The details of the number of cases of violation of the Chit Funds Act, 1982, are not maintained by the Central Government, since action in these cases is taken by the respective Registrars of Chits in each State / UT. The following information has been brought to notice by RBI and the Serious Fraud Investigation Office (SFIO):

-  RBI has informed that they received 4 complaints against M/s Sheeba Kuries Ltd., a Chit Fund Company registered at Pune wherein complainants primarily raised issues of non-repayment of money collected through the scheme. The same was referred by RBI to the Joint Registrar of Chit (ROC), Chit-Funds, Mumbai, Maharashtra.
-  SFIO has informed that during the period from 2012-13 to 2020-21 and current financial year (till  date),  the  Ministry  of  Corporate  Affairs (MCA) assigned to  SFIO  38  cases involving 256 companies for investigation, which are allegedly engaged in chit fund/Multi-Level Marketing/ Ponzi schemes.

(c)  to  (e): No specific  complaint  has  been  received  against  the  company  named  Financial  Health Care Services Limited, as  per  available  information.  RBI  has  confirmed  that  Financial Health  Care

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 1088

## TO BE ANSWERED ON MONDAY, JULY 26, 2021/ Sravana 4, 1943 (Saka) CHIT FUND COMPANIES

Services  Ltd.  is  not  a  registered  NBFC  with  RBI.  SEBI  has  informed  that  it  does  not  have  any jurisdiction  over  the  said  company.  The  Serious  Fraud  Investigation  Office  (SFIO),  Ministry  of Corporate Affairs (MCA) has also confirmed that MCA has not assigned investigation into the affairs of Financial Health Care Services Ltd. to SFIO.

However, in order to curb illicit deposit taking companies (including companies operating illegitimately under the garb of chit fund companies) from running unauthorized schemes and to prevent common people  from  losing  their  hard  earned  money,  the  following  measures  have  been  taken  by  the Government:

-  The Banning of Unregulated Deposit Schemes Act, 2019 has been enacted and has come into force from 21.02.2019. The Act contains comprehensive provisions to tackle illicit deposit taking activities in the country and to protect the interests of depositors. The Act contains a substantive banning clause which bans deposit takers from promoting, operating, issuing advertisements or accepting  deposits  in  any  Unregulated  Deposit  Scheme.  The  Act  also  provides  for  severe punishment and heavy pecuniary fines to act as deterrent.
-  29 States / Union Territories have passed Protection of Interest of Depositors (PID) Acts for taking action against entities collecting money from the public illegally.
-  SLCCs have been set up in all States and UTs with participation by all State Government officials, law enforcement agencies, regulators, etc. SLCCs were reconstituted in April 2014 with the Chief Secretary of the State as the Chair and the frequency of such meetings has been increased from twice a year to four times a year.
-  Reserve Bank of India (RBI) has cautioned the public regarding Ponzi schemes under the head of Frequently  Asked  Questions  (FAQs)  on  their  website.  Further,  through  RBI's  online  portal SACHET (https://sachet.rbi.org.in), the public is cautioned against fraudulent schemes/ entities.