High-powered group set up to regulate chit funds: Takru

The government has decided to set up a high-powered group post the Saradha chit fund scam that will meet every month to regulate chit funds. The high-powered group will include joint secretaries from ministries, financial services secretary Rajiv Takru said on Wednesday.

Speaking to CNBC-TV18, he added that there was no need of a new law or regulator for chit funds and confirmed the RBI, ED, SEBI, CBDT, SFIO and the police were investigating the Saradha case.

After an RBI audit listed irregularities in HDFC Bank  , ICICI and Axis Bank  , government has directed the banks to put in place a new system to prevent money-laundering. A penalty on banks will be imposed if required and banks have been asked to change their incentive structures to prevent staff accepting black money, said Takru.

He hoped the RBI would adopt a balanced view in its monetary policy and looked forward to thespeedy passage of the Insurance and Pension Bills by Parliament . "The government has no plans to increase the FDI cap in the banking sector."

Though India continues to be largely unbanked and offers immense scope for new banks, the RBI has clarified that entities in high-risk businesses will not be granted licences , Takru said.

Increasing LIC's exposure to debt and equity is being considered by the government and  will hold discussions with IRDA in this regard, he added.