Banks can save people from chit fund companies, says RBI Deputy Governor

Bhopal: Chit fund companies are easily fooling people especially in the rural regions and smaller towns across Madhya Pradesh. Deputy Governor of Reserve Bank of India (RBI) Dr KC Chakrabarty believes if the banks are expanded uniformly across the state – covering even the smaller towns – the people might be saved from these fraud chit fund companies. Chakrabarty was speaking to reporters after a attending a State-level meet of Banking Credit Committee (SLBC). He said banks usually do not think of expansion in smaller towns and villages. He further said some banks are even giving much less interest on saving than accepted. These kinds of situations force the people to go to the chit fund companies, he added. The RBI Deputy Governor said the banks are expanding their reach to villages due to pressure from the state and central governments. However, they have little plans for better reach to the people in these small places, he said. He said asserted that chit fund companies and individual lenders prosper in such towns and cities. Chakrabarty said the RBI has limited rights when it comes to taking action against the chit fund companies. RBI can only dictate that these companies do not have the right to take direct deposits. On case if any default, however, the action needs to be taken by the state government.

Daily Bhaskar