Amid rising concerns over ponzi menace, the apex body of financial sector regulators FSDC will strengthen efforts to crack down on illegal money pooling schemes by asking states to enact stringent laws in this regard.
The decision to strengthen the mechanism to monitor Collective Investment Schemes (CIS) related issues was taken at the 13th meeting of the Sub-Committee of Financial Stability and Development Council (FSDC-SC) held in August this year.
The information was made public by the Reserve Bank today, which for the first time has released the minutes of meeting of the FSDC-SC meeting.
"It was decided that the State Level Coordination Committee (SLCC) mechanism would be further strengthened to monitor CIS related issues. State governments which have not yet enacted laws to deal with unauthorised deposit taking activities would be encouraged to do so," a release said.
Government is planning to bring in a tough set of norms to regulate money circulation and pyramid marketing businesses and a provision for large penalties and imprisonment for running illicit financial schemes.
Among other major points discussed in the FSDC-SC include introduction of uniform KYC norms and inter-usability of Know Your Customer (KYC) records across the entire financial system as well deepening of the corporate bond market.
A group headed by a former law secretary would examine all existing laws and a single bankruptcy code would be put in place as an effective bankruptcy code is critical in developing sound corporate bond market.
It was also decided to constitute a group to recommend various measures for further developing the corporate bond market.
Among others, it was decided to deepen the currency derivatives market by eliminating unnecessary restrictions, strengthening and deepening the interest rate futures (IRF) market in India and participation of Domestic Financial Institutions (DFIs) and FIIs/ Foreign Entities in Commodity Markets.
"The Sub-Committee discussed various issues associated with the proposal and it was decided that Forward Markets Commission (FMC) and RBI together would examine the issue further," the release said.
