RBI, govt should protect investors from illegal schemes, says Subbarao

It is the responsibility of the central bank, as well as the government, to protect investors from financial frauds, RBI Governor D Subbarao said on Wednesday, against the backdrop of chit fund schemes going bust in West Bengal and elsewhere.

"It is the responsibility of the government and the regulators to protect people from such fraudulent schemes," said Subbarao, who demits office in a week. He was speaking at the Reserve Bank headquarters here ahead of the presentation of Rajbhasha shields to commercial banks and other financial institutions. Subbarao suggested a two-pronged approach: spreading awareness on the dubiousness of such schemes among investors and deepening of financial inclusion, so that the common people's savings are routed to the formal financial system.

The outgoing governor also said financial inclusion and financial literacy were among the top priorities for the central bank.

He said RBI and the government had been running advertising campaigns in Hindi and regional languages, and have requested banks to help in these efforts.

Recently, the high-profile Saradha group in West Bengal went bust, putting the hard-earned money of thousands of investors in jeopardy. The incident has triggered an intense debate over how to regulate chit funds.