Reserve Bank of India (RBI) Governor D. Subbarao Wednesday said tighter regulations were needed to stop the proliferation and illegal operations of chit funds like the Saradha scheme in West Bengal.
"We need to tighten our regulation to minimise the illegal existence and operations of the shadow banking system in the country," Subbarao said, delivering the keynote address at the seventh annual international conference on banking and finance, organised by Indian Merchants' Chamber.
Subbarao said tightening of regulations was needed to protect the economically vulnerable from getting cheated by the scamsters.
The Saradha group has been accused of cheating lakhs of chit fund investors of several crores of rupees.
There are currently 12,000 NBFCs (non-banking financial companies) in the country which are registered and regulated by the RBI.
