India has constituted a high-powered committee to
recommend steps to strengthen the existing legislative and administrative
framework for curbing the menace of Ponzi schemes.
Inter-ministerial Group comprising senior officials
of finance, home and law ministries as well as the investigative agencies will
study the existing statutory framework for dealing with unauthorized deposit
taking activities and suggest ways to plug the loopholes and beef up the
system.
Besides identifying legislative and administrative
changes needed to plug loopholes in the 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 which are investigating such cases.
The SOP, sources said, will ensure that prosecutors
are able to nail 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 recommendations of the group would help
government arm state and Central regulators and agencies to check such
activities.
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 the Securities and
Exchange Board of India.
Non-banking financial companies are under Reserve
Bank of India (RBI) regulations whereas companies in general fall in the
regulatory framework of the corporate affairs ministry.
RBI figures show that there are more than 700
companies spread across different states against which complaints of
non-payment of investors' money have been received.
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