Lack of growth caused chit fund scams in east: Sinha

Inequitable growth and lack of jobs in eastern India contributed to the proliferation of unauthorised deposit accepting schemes in the region, Sebi Chairman U K Sinha said today.
"Perhaps in eastern part of India, the economic activity, job opportunity (and) growth have not been in an egalitarian or disbursed way. This has been one of the primary causes (for chit fund scams)," he said here.
Sinha added that even though one can argue that deepening of banking network could have been helpful, the "story goes much deeper".
He was speaking on the sidelines of an event held to launch journalist Tamal Bandyopadhyay's book 'Bandhan: The Making of a Bank'.

The book chronicles the journey of Bandhan, the Kolkata-headquartered microlender-turned-universal bank.
"West Bengal is also the place where such unauthorised activities are mushrooming and it should be a matter of serious study as to what is the reason for such activities (in the region)," he said.

Stating that he does not have an immediate solution to the problem, Sinha advised everybody concerned to be alert in this regard.
It can be noted that a string of such schemes have emerged in eastern India where companies decamp with hard-earned money of the poor by offering high interest rates, including the multi-crore Saradha scam.

Sinha said the Securities and Exchange Board of India (Sebi) has taken action in 250 such fraudulent schemes, with the highest deposit acceptance being Rs 50,000 crore in one case.
"...Both in terms of credit and also in terms of providing savings and investment opportunities, India is a breeding ground for unscrupulous people," he said, adding the government, financial regulators and service providers have to work together to curb the menace.
Speaking on other issues, Sinha said there is a need for deepening the corporate bond market for making it easier for companies to raise funds.
Alluding to the launch of separate SME platforms in national exchanges, he said it has helped many smaller companies access growth capital and also created value for investors.

"Already 150 companies have got listed and the good thing is that if you look at the valuation of these companies at the time of listing and now, there has been substantial improvement," he said.