Centre spells out in SC steps taken to curb ponzi schemes

The Centre today told the Supreme Court that various steps have been taken by the government for empowering SEBI to take appropriate actions with regard to any illegality regarding "collective investment schemes" or chit funds.
"Various steps have been taken by the (Finance) Ministry with regard to carrying out suitable amendments in the statute for empowering SEBI to take appropriate actions with reference to any illegality regarding collective investment schemes.
"It is submitted that the government has prepared draft rules for effectively implementing the provisions of the Prize Chits and Money Circulation Schemes (banning) Act, 1978 and the same has also been circulated to the state governments requesting them to adopt such Rules after vetting by their respective law department for protecting gullible investors," an affidavit filed by the Ministry of Finance before a bench headed by Chief Justice T S Thakur said.

The Department of Financial Services (DFS) had constituted a high-level Inter-Ministerial Group in 2013 for proper enforcement of regulatory/legal framework for multi-level marketing companies, non-banking financial companies and companies running collective investment schemes under the chairmanship of additional secretary DFS, it said.
"DFS had written in 2012 to all the chief secretaries requesting them to set up committee including representatives from RBI, SEBI, MCA and EoW of the state police to enable enhanced sharing of information among the agencies concerned regarding unregulated activities and entities raising money from the public with a view to defraud people.
"The department had also requested that the mechanism on the lines of state-level coordination committees coordinated by RBI may be established for the exchange of coordination," the affidavit said.

Refuting the allegation that absence of banking industry and lack of financial inclusion for the low-income groups have drawn people to collective deposit schemes of financial companies, the ministry said that "the Government of India is committed to financial inclusion of the poor and vulnerable sections of society across the country.
"It has launched an ambitious financial inclusion programme called Pradhan Mantri Jan Dhan Yojana under which the target is to provide universal access to banking facilities for all the households across the country through a bank branch or a fixed point business correspondent within a reasonable distance and to cover all households with at least one basic bank account with RuPay Debit card having inbuilt accidental insurance cover of Rs 1 lakh," it said.

It said that the government has also launched social security schemes like Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojana for the welfare of the people.