The Maharashtra government has introduced fresh — and stringent — guidelines to protect gullible depositors and investors. An amendment to the Maharashtra Protection of Interest of Depositors Act (MPID), 1999, now includes in its ambit companies incorporated under the Companies Act, 1956, and non-banking financial firms; these were excluded from the scope of MPID when it was originally passed. The new amendments ensure that fly-by-night operators will no longer be able to float incorporated companies and then claim exemption from the MPID.
After a series of frauds in Mumbai last year, the government set up a high-power committee to review the existing rules, and these amendments were a result. The amended guidelines will be placed before the state cabinet for approval this month, officials said.
Other provisions in the amended rules, on the recommendations of the Economic Offences Wing (EOW) of the Mumbai police, include: the provision for securing the property of the accused by concerned authorities; the increase in jail term from six years to ten years; and the provision to also attach the property of a borrower or a third party.
A senior police official said, “The provision for securing a property has been added to ensure that no mala-fide transfer is carried out during the course of the investigation. In the past, we have seen the accused managing to sell off his property to evade attachment.”
The new rules also make it binding on the courts to deliver a judgement less than 90 days from the filing of an ‘Attachment’ certificate by a district collector. According to police officials, this is designed to force financial establishments and partners to settle with depositors and investors speedily.
In order to pay for deeper investigations, a two per cent levy over the sale proceeds of attached properties will be kept aside. “With these changes, and fast track courts, we are hoping justice would be done in most cases,” a senior police official said.
So far, under the MPID, the state has registered 180 cases of financial fraud, involving property worth Rs. 12,658 crore, affecting nearly 68 lakh investors. From these, property worth Rs. 9,500 crore has been secured, and Rs 7,000 crore worth of property has been attached. Final valuation and auction has been carried out in 131 cases, and in another 49, the process towards auction is in progress.
The Bharatiya Janta Party (BJP) MP Kirit Somaiya had filed a complaint with the EOW claiming that more than 200 Ponzi schemes involving Rs 4,00,000 crore are still in operation. (A Ponzi scheme is a an ‘investment’ where the operator gives returns to early investors not from legitimate profit-making but from money invested by later investors. According to a SEBI Report, 6 crore people across the country have been cheated of Rs 80,000 crore through such schemes.) With the Security and Exchange Board of India (SEBI) refusing to take action, 165 such schemes continue to flourish in Maharashtra.
“We have shortlisted 42 of these firms for our final investigation and have so far taken action against 18. Of the remaining 24, there is no trace, on the Internet or otherwise, to pursue,” a senior official of the EOW said.
