Fraudulent investment schemes: IMG to meet on May 23

Amid the uproar over investment fraud in West Bengal, an inter-ministerial group will hold its first meeting this week to suggest ways to deal with such schemes against the backdrop of demands within a Parliamentary Committee for scrapping of chit fund schemes.

The IMG, headed by Department of Financial Services' Additional Secretary, will meet on May 23, a Finance Ministry official said.

The meeting was earlier scheduled for May 16, but was postponed.

"The Group (IMG) is expected to strengthen the existing coordination mechanisms for regulation and supervision of financial sector," the Finance Ministry had said while announcing the setting up of the panel.

The IMG comprise Joint Secretary level officers from Department of Economic Affairs, Department of Revenue, Corporate Affairs Ministry, RBI and SEBI.

The panel has been set up to ensure "proper enforcement of regulatory framework for multi-level marketing companies, non- banking finance companies and companies running collective investment schemes".

The Yashwant Sinha headed Parliamentary Committee on Friday had pressed for blanket ban on investment schemes promising unreasonable returns and demanded a single regulator to oversee their functioning or scrapping them altogether, sources said.

Sinha suggested the 1982 Act regulating chit fund business in the country be repealed through an ordinance, they said.

The Parliamentary panel has asked the Finance Ministry to submit a written reply on the operation of such investment schemes in the country and preventive actions taken by them.

Many entities have registered themselves as chit funds but are found to be raising money illegally through fraudulent schemes or ponzi schemes by promising high returns.

The IMG was set up in the backdrop of the collapse of Kolkata-based Saradha Group that had allegedly duped lakhs of investors of their hard-earned savings totalling thousands of crores of rupees.