Reserve Bank Governor D. Subbarao, on Wednesday, questioned the fairness of the West Bengal Government’s proposal to levy additional tax on cigarettes to compensate the victims of Saradha chit fund scam.
“If you go back to the West Bengal Saradha scheme, the Chief Minister said ‘I will levy additional taxes on cigarettes and some other things to compensate the people who have lost money’ ... Is it fair?,” Dr. Subbarao said while delivering a lecture here. The general principle of banking was that the people who put money in banks should also bear the risk, he said.
“Why should all of us support people who put their money in a bank? Do you recognise that the tax payers are compensating the people who invested their money in a bank,” he asked.
“The reason it (the nefarious schemes) is happening because ordinary people... the low income people are not sufficiently aware of where they can put their money. They don’t have enough avenues to put their money. They can’t get into the banks like we all do. They face both formal and informal barriers,” he said.
“So they fall prey to these fraudulent schemes, fraudulent people who tell them they will give 30 to 40 per cent returns within six months,” he added.
He said in case of a bank failure, the issue should be resolved in such a way that the damage was confined to the stakeholders of the bank.