Worried about mushrooming chit funds, capital market regulator SEBI has urged the central government to formulate laws to set up a single regulator to ensure that they don't dupe investors, an official said here Tuesday.

"We have requested the government to make a new set of laws to provide a single regulator for such companies," SEBI chairman U.K. Sinha said when asked to comment on the proliferation of chit funds in the country, especially in West Bengal.

The Securities and Exchange Board of India strongly believed that such firms were taking advantages of some "loopholes" in the existing regulations, Sinha said.

"We have taken it up with the government and have asked it to plug loopholes," he said at an event organised by industry group CII here.

According to Sinha, some investors - particularly in the eastern part of the country - were getting into investment schemes which were not legal.

"People are investing money when they are promised that the money would be doubled in four years. They are also giving a commission to agents at 15 percent to 25 percent. I cannot think of any legitimate business where people can get that kind of returns," he said.
"After some time they would not get any returns. It is a very worrying situation," Sinha said.
Hundreds of such firms across India have reportedly flourished by flouting rules, raising concerns over safety of public money.

On taking action against chit funds in West Bengal, Sinha said: "Whatever is coming to our notice, we have initiated proceedings. In some cases we have started investigations."