QUESTION NO 222 ANSWERED ON 06.08.2013 Ponzy schemes operating in the country 222 SHRI PRAKASH KESHAV JAVADKAR Will the Minister of FINANCE be pleased to satate :- Will the Minister of FINANCE be pleased to state: a) the details of complaints received by Government regarding ponzy schemes operating in India since 2009; b) the action taken by Government in this regard; and c) what future action plan Government has devised to prevent such ponzy schemes? ANSWER THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA) (a) to (c): The provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 empower the State Governments to implement the provisions of the Act and take action against the defaulting entities / persons. The Reserve Bank of India (RBI) has reported that as and when any complaint is received alleging cheating / fraud by entities by way of falsely promising high returns / running money circulation schemes, etc., the same is forwarded to the appropriate Government / agency for taking necessary action in such matters. Further, RBI has also advised banks to be careful in opening of accounts of the marketing / trading agency, etc. and ensure strict compliance with the Know Your Customer (KYC) and Anti Money Laundering (AML) guidelines of RBI. In cases where accounts have already been opened in the names of the marketing agencies, retail traders, investment firms, etc.; the Banks have been advised to undertake quick reviews of operations in such accounts particularly in cases where large number of cheque books have been requested or issued. RBI has also informed the members of the public by a press release dated 10.01.2012, to register a complaint with local police / cyber crime authorities whenever they received any fictitious offer or they are victims of such offers. RBI has also been sensitizing the state Governments that Multi-Level Marketing (MLM) schemes fall under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978, and they should take appropriate necessary action whenever instances of MLM are reported to them. The Government has also promulgated an ordinance to amend Securities and Exchange Board of India (SEBI) Act, 1992 for providing more powers to the capital markets regulator for enforcement against illegal Collective Investment Schemes and to curb insider trading. Owing to new and innovative methods of raising funds from investors, such as art funds, time-share funds, emu / goat farming schemes, there has been regulatory gap / overlap regarding types of instruments / fund raising. At the same time, SEBI receives complaints against unapproved fund raising activities of certain companies that claim that they do not come under the purview of SEBI Collective Investment Scheme Regulations. With the amendments in force now, SEBI would have powers to regulate any pooling of funds under an investment contract involving a corpus of Rs.100 Crore or more, attach assets in case of non-compliance and Chairman, SEBI would have powers to authorize the carrying out of search and seizure operations, as part of efforts to crack down on ponzi schemes.
Posted on: Wed, 07 Aug 2013 10:34:24 +0000
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