With ponzi schemes continuing to dupe lakhs of gullible investors, government has initiated a process to "plug loopholes" in the present legislative and administrative framework to curb this menace.
A high-powered Inter-Ministerial Group, comprising senior officials from Finance Ministry, Home Ministry, Law Ministry and investigative agencies, has been formed to identify changes required in the present statutory framework for "effective curbing" of "unauthorised deposit taking activities".
Besides identifying legislative and administrative changes needed to plug loopholes in the present system, the group has also been mandated to lay down a standard operating procedure (SOP) "for processes to be followed by the lead agency and authorities concerned" which are investigating such cases.
The SOP, sources said, will ensure that prosecutors are able to nail the culprits in courts without delay.
The detailed, written instructions will also help agencies achieve uniformity in their performance while investigating such cases across various jurisdictions.
Many entities are exploiting legal loopholes to cheat the public with ponzi schemes and the recommendations of the group would help government arm state and central regulators and agencies to check such activities.
In recent times, numerous instances have come to light where investors have been duped by fraudulent investment schemes. In many cases, fraudsters collected money in the garb of chit funds like that in the infamous Saradha scam.
With regulatory loopholes and multiple agencies, it has been difficult to curb the menace of ponzi or illegal money pooling schemes.
While chit funds are regulated by state governments, collective investment schemes come under the ambit of capital market watchdog Sebi. Non Banking Financial Companies (NBFCs) are under the regulations of RBI whereas companies in general fall in the regulatory framework of the Corporate Affairs Ministry.
As per RBI data, there are more than 700 companies spread across different states against which complaints of non-payment of investors' money have been received. None of these entities is registered with RBI.
