RBI on Thursday cautioned investors not to be allured by unlawful money collection schemes promising high returns, saying that it is not possible for the central bank to always keep a check on them as it does not have the reach of state governments. "The important thing is that village people must understand what is legal and what is illegal, what is regulated and what is not regulated. Where should they go for advise. All this is something that they must understand," RBI Governor D Subbarao while talking to reporters at an outreach programme in Khurda village near Indore.
Effort of the RBI, he said, is to spread awareness about investing in proper schemes and not to get duped by fly-by night operators. Subbarao also stressed that chit fund companies are not illegal. "However, there are lot of other schemes which people understand as chit fund which are illegal. They are not chit fund schemes... There are some schemes like people collecting money saying we are going to invest in cattle farming, forest...and then they take the money and run away. So such schemes are illegal," he said.
The Governor further said that surveillance over unlawful investment schemes and enforcement of law has to be done by the state government as the "RBI or Government of India do not have the reach of state government". Thousands of inventors, especially in eastern India, have been duped by Kolkata-based Saradha Group.
On Wednesday, market regulator Sebi barred Kolkata-based Rose Valley group from raising public money in the name of 'holiday membership' scheme, through which it is estimated to have garnered over Rs 1,000 crore without necessary regulatory approvals. To a query on education loan, Subbarao said that RBI was encouraging banks to "be more liberal, more proactive" in giving the loan.