Reddy: Suggesting steps

Durgapur, Dec. 30: The Calcutta Stock Exchange (CSE) will organise awareness campaigns against chit funds and promote investments in shares as an alternative.

The bourse will conduct campaigns across the state to spread the equity cult and the benefits of routing their savings through market intermediaries approved by the Securities and Exchange Board of India (Sebi).

Diversified financial services firm Aimco will organise the programmes.

CSE managing director and chief executive officer Madhav Reddy said chit funds had raised Rs 15,000-16,000 crore in the last few years.

“These funds are mostly outside the ambit of Sebi regulation. We propose to educate investors on the merits of investing in equity and other safer financial instruments such as company deposits, debentures, bank fixed deposits and other products such as mutual funds and exchange traded funds,” Reddy said on the sidelines of one such awareness programme in Durgapur on Saturday.

Eman Kalyan Ghosh, chief executive officer of Aimco, highlighted the importance of tracking and regulating the activities of chit funds.

“Some of these chit fund companies create a trustee company and take public deposits but these are not registered under the Indian Trust Act, 1992. Besides, they are not even registered as market participants with Sebi. All they have by way of credentials is a company registration certificate on the basis of which they have been raising public deposits with promises of high returns, ranging between 20-50 per cent per annum within a two to three year time frame,” he said.

He also added that mutual funds, insurance companies and other engaged in financial services had lost substantial business in both urban and rural areas because of these chit fund companies.

Aimco has conducted awareness programmes in the past under the aegis of the Indian Commodity Exchange and the Forward Markets Commission in suburban areas.