India plans legislation to close a regulatory loophole that has made it possible for fraudsters to dupe millions of savers, Reuters reports.
Prime Minister Narendra Modi has been trying to bring the rural poor into the mainstream banking system.
Meanwhile, unscrupulous operators have bilked savers of billions of dollars by running pyramid schemes or promoting questionable investments in everything from tree plantations to farming emus.
The most notorious has been Sahara Group. Its founder, Subrata Roy, was jailed in 2014 after failing to comply with a Supreme Court order to repay money raised under deposit plans later ruled illegal.
The court has asked Sahara to return US$5.4 billion to investors in those banned plans.
“Our aim is to take steps so that there are no more scams like Sahara in future,” said Nishikant Dubey, a member of parliament’s standing committee on finance from Modi’s ruling Bharatiya Janata Party.
Parliament could consider a bill in July that would replace weak rules that now govern credit cooperatives operating in more than one state. These are now overseen by just 10 staff at the Agriculture Ministry.
The officials lack the resources to monitor such savings groups and have faced pressure to turn a blind eye from politicians who personally profit from them, Reuters reports.
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