<b>Letters:</b> A fraud prevention body?

Apropos Debashis Basu's article "The price of regulators' ignorance" (May 6), the author rightly suggests it is unfair to label depositors as being "financially illiterate", thereby indirectly blaming them for falling prey to such predatory practices. It's the regulators' responsibility to act against entities that illegally collect deposits from the public, and action must be taken expeditiously the moment such practices come to their attention. In this respect, the author mentions that while deposit-taking from the public is supposed to be regulated by the Reserve Bank of India (RBI), collective investment schemes (CIS) fall under the purview of the Securities and Exchange Board of India (Sebi). Considering the Saradha group's activities comprised both collection of deposits and CIS, no single regulator was directly accountable for initiating action in this case. Hence, it is critical that the government institutes a mechanism by which fraudulent financial activities of this sort (particularly when it involves the savings of people at the lower rungs of society) are identified quickly and corrective/preventive measures are taken swiftly. Specific bodies (such as RBI and Sebi) either individually or together require to be assigned the responsibility of identifying and preventing such Ponzi schemes. The regulators would have to be adequately equipped with human and other resources for such regulation as well as being suitably empowered in legal terms to initiate criminal action against such unscrupulous operators. At the end of the day, it is the regulators who need to be made accountable for the detection and prevention of such fraudulent activities so that entities like Saradha cannot defraud unsuspecting people.

Srijit Basu, Kolkata

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