Budget 2014: Government Proposes New Legislation to Check Chit Fund Frauds

To safeguard investors from fraudulent money pooling schemes, the government has proposed to legislative initiatives to regulate companies engaging in prize chits and money circulation schemes.

"As part of the legislative initiatives under financial sector reforms, it is proposed to bridge the regulatory gap under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978," Finance Minister Arun Jaitley said while presenting the Budget for financial year 2014-15.

"This step is expected to facilitate effective regulation of companies and entities which have duped a large number of poor and vulnerable people in this country," Mr Jaitley said.

The Finance Minister said benefits of insurance in India have not reached a large section of the people as insurance penetration and density are very low.

He assured that the government would work towards addressing this situation in a multi-pronged manner with the support of all concerned stakeholders.

This would include suitable incentives, using banking correspondents and strengthening micro-offices opened by public sector insurance, among others