Inter-Ministerial Group discussed issues regarding protection of depositors from fraudulent schemes
An Inter-Ministerial Group (IMG) on Friday deliberated on ways, including grant of more powers to the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), to protect gullible investors from fraudulent money pooling schemes.
The discussions of the panel, which was formed in the wake of Saradha scam, come against the backdrop of many entities exploiting legal loopholes to cheat the public with ponzi schemes.
According to sources, the group discussed issues with regard to protection of depositors from fraudulent investment schemes as some States do not have strong legislation in this regard.
Besides, the meeting deliberated upon giving more powers to the RBI and SEBI.
The IMG, headed by the Department of Financial Services Additional Secretary, is reported to have discussed gaps in the regulatory mechanism to deal with collective investment schemes.
While SEBI regulates collective investment schemes, NBFCs are under the supervision of the RBI and chit funds are regulated by the respective State governments.
The panel has been set up to ensure “proper enforcement of regulatory framework for multi-level marketing companies, non-banking finance companies, and companies running collective investment schemes.’’
The IMG comprises Joint Secretary level officers from the Department of Economic Affairs, the Department of Revenue, the Corporate Affairs Ministry, the RBI and SEBI.
The Yashwant Sinha-headed Standing Committee on Finance had recently pressed for blanket ban on investment schemes promising unreasonable returns, and demanded a single regulator to oversee their functioning or scrapping them altogether.
He had suggested that the 1982 Act, regulating chit fund business in the country, be repealed through an ordinance. — PTI