RBI, govt working to regulate illegal money taking entities

Tags: News
The Reserve Bank is working with the government to bring about changes in the law to regulate the entities who are illegally accepting deposits from the public, Deputy Governor R Gandhi said today.

"There are a number of companies that are registered as finance companies but are not regulated by the Reserve Bank. There are incorporated companies and unincorporated entities who are illegally accepting deposits. The laws these days are inadequate to deal with these issues.

"In order to correct these and initiate actions against these issues we need to bring suitable amendments in the statutory provisions. Reserve bank is working with the government for such improvements in the law," Gandhi said during a conference here on 'Governance & Development: Views from G20 Countries'.

He said these unincorporated bodies undertake financial activities but remain unregulated. He said these, unincorporated non-banking financial companies (NBFCs) can spring in any nook and corner of the country and can operate unnoticed and endangering their customer's interest.

"We need arrangement and structure for effective monitoring. The Reserve Bank is restructuring its operational set up especially in its regional offices for gathering market intelligence," he said.

However, gathering intelligence is not sufficient, he said adding, the enforcement of the law is also a challenge.

Besides, there are international requirements also and shadow banking need to be brought under tighter regulation.

He said G20 has already expressed its affirmation to bring such regulations by 2015.

Speaking about domestic scenario, he said, "Shadow banks in India, that is NBFCs, they have been under the regulation for more than 50 years. They play a complimentary and supplementary role in the economy to mainstream banks and also in furthering financial inclusion. Yet they do pose challenges, we agree, but of different variety."

Gandhi said the challenges related with NBFCs in India are about customer protection and it is a constant endeavour of the RBI to enable potential interest of the sector keeping in view the multiple objectives of financial sanctity, consumer and depositor protection and need for more players in the financial markets.

EDITORIAL OF THE DAY

  • India’s political space acts as a safety valve for maverick politicians and frustrated electorate

    While it is easy to be cynical about Indian democracy and its ways, the fact is that the vast political space that the system provides for in this cou

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Taslima Nasreen

Bangladesh no country for atheists

It’s a matter of pride to be a freethinker, atheist ...

Purnendu Ghosh

Silence makes you aware of yourself

Often, we don’t feel the necessity of making contact with ...

Shona Adhikari

Artistic focus on women's empowerment

The focus on the girl child remains an important one ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture