Law to check fraudulent chit fund firms
HYDERABAD: Andhra Pradesh government has decided to bring a tough legislation to stop private chit fund companies and financial institutions from duping the depositors by offering them lucrative interest rates on their deposits.
According sources, the state government has prepared a draft bill by making changes to the existing laws which govern the financial institutions in the state.
'The government wants to introduce the bill in the ensuing budget session of the State Assembly to check rampant economic offences resorted by chit fund companies by offering lucrative interest rates on deposits,' according to sources.
The sources said, in the draft bill, the government proposed to make it compulsory to register any chit fund company, financial institution and real estate company in the state. There are provisions in the bill to empower the state government to attach the properties of fraudulent financial companies on the lines of Enforcement Directorate.
'After studying the similar laws in force in Odisha and Tamil Nadu, officials have prepared a draft bill to curb the economic offences in our state. The bill is under legal vetting.
The government is planning to introduce the bill in the Assembly during the Budget Session,' an official said and added till now the decision on the attached properties of fraudulent financial companies were with the courts. There was also a proposal to empower the government to auction those properties to pay back the duped depositors.
Besides, the state government is also planning to empower the police department to file suo motu cases against such companies which offer lucrative interest rates on deposits to customers so as to cheat them.
In fact, finance minister Yanamala Ramakrishnudu had already assured the Legislative Council during its earlier session that the state government would incorporate stringent provisions in the legislation to prevent mala fide activities of chit fund companies.
News Posted: 22 February, 2015
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