 "RBI steps up efforts to improve coordination with law enforcement agencies")
The banking regulator has held meetings with chief secretaries of states and is making efforts to improve coordination between regulators and law enforcement agencies for early identification of financial malpractices by some fly-by-night operators.
“Since the revelation of the financial mismamangement of some Ponzi schemes, there was a feeling that some of these entities are falling in the so-called regulatory gap. Since then we had a meeting of chief secretaries where we have urged them to make much better use of the state-level coordination committees. These committees should meet more frequently, at least four times a year,” RBI Governor Raghuram Rajan had said following the central bank’s board meeting in Kolkata last week.
A number of states, including West Bengal, have also created sub-committees under their state-level co-ordination committees.
“These are a sort of full-time contact points among the regulators and law enforcement agencies within the state. Then we can go quickly after some of these fly-by-night operators. There is now a much greater level of coordination as a result of our feeling that some of these entities were not falling within precise regulatory ambits,” Rajan added.
In April, 2013 Saradha Group, which was involved in an illegal deposit mobilisation scheme, shut shop. It had raised close to Rs 2,000 crore from over one million small investors in West Bengal alone. The company also had operations in other states including Odisha and Assam. After the scam came to light, the West Bengal state police arrested Saradha Group promoter Sudipta Sen and a few other key officials.
The Central Bureau of Investigation (CBI) has now taken charge of the investigation and arrested people with close links to the ruling Trinamool Congress (TMC).
West Bengal’s Transport Minister Madan Mitra, TMC’s Member of Parliament (MP) Srinjoy Bose, its suspended MP Kunal Ghosh, and the former director-general of West Bengal police, Rajat Majumdar, have been taken into custody so far.
The Supreme Court, which had given its go-ahead for the CBI probe in the Saradha chit-fund case, had questioned the role of regulators — the Securities and Exchange Board of India (Sebi), RBI and the Registrar of Companies — for their inaction in the multi-crore scam.
“Investigation conducted so far puts a question mark on the role of regulatory authorities like Sebi, the Registrar of Companies and the RBI, within whose respective jurisdictions and areas of operations the scam not only took birth but flourished unhindered,” the Supreme Court had said in its order in May.
RBI officials claimed the coordination between regulators and law enforcement agencies have now improved in West Bengal.
“We have already strengthened the mechanism of co-ordination. We have already conducted one set of state-level coordination committee meeting. Also, for the last three months, we are regularly meeting in the sub-committees and reviewing the progress on a continuous basis,” said a senior RBI official.
The banking regulator has also held training sessions for the state police department at the district level to help them check the proliferation of illegal chit fund companies.
However, government officials feel that the steps taken are still not adequate to prevent Saradha-like scams.
“The practice of officers being sent for training to RBI had been in place even before the Saradha scam. But these officers have hardly been used for the purpose for which they were trained,” said a senior official of the West Bengal government.
The state’s Consumer Affairs Minister Sadhan Pande claims such training camps are held occasionally. “They are quite infrequent. Only 150 officers from our state consumer affairs department underwent such training in last one year,” he said.