Centre drafting pan-India law to deal with chit funds: Jaitley

The Lok Sabha on Thursday passed the Banking Regulation (Amendment) Bill 2017 that seeks to replace the NPA (non performing assets) Ordinance promulgated on May 7 with Finance Minister Arun Jaitley saying that RBI is expected to refer more cases for insolvency proceedings.

Jaitley said the government was also in the process of drafting a Central chit fund law to save poor people from dubious schemes.

"In the first round, the RBI had referred 12 cases to the banks to be taken up for insolvency proceedings. In all the 12 cases, the insolvency process has been initiated. Shortly, we expect to see the process of resolution in these 12 cases," Jaitley said replying to the discussion on the bill.

Later the House passed the bill by a voice vote. The bill will amend the Banking Regulation Act 1949.

He said most of the NPAs were build up due to sectoral stress in steel, road, power and infrastructure sectors. The government is trying to solve them through multiple mechanisms.

The Centre has also authorised the Reserve Bank of India through the NPA Ordinance to asks banks to take insolvency resolution in respect of defaults, he said adding several laws such Sarfaesi Act and Insolvency and Bankruptcy Code have helped in resolving stressed asset problems to an extent.

Replying to a separate query on chit funds, Jaitley said there was a need for a pan-India law to deal with chit fund schemes in addition to the existing state laws.

He said the Securities and Exchange Board (Sebi) was looking into it.

“There are state laws for chit funds in Bengal and Odisha. But what to do with those who run operations throughout the country. We are drafting a central law and very soon we will bring it before you," Jaitley said.