Faced with a mushrooming ponzi menace across the country, the government is considering a possible ban on promotion of money-collection schemes promising unrealistic returns.
New Delhi: Faced with a mushrooming ponzi menace across the country, the government is considering a possible ban on promotion of money-collection schemes promising unrealistic returns.
Emphasising on the need to prevent dissemination of false information to the public by the operators of illegal deposit-taking schemes, Corporate Affairs Minister Sachin Pilot has said that the advertisements for such products need to be banned, just as promotion of alcohol, cigarettes and many other products are prohibited by law.
"If someone is telling that they will double the money in five months or so, it must be being publicised somewhere. That is how people come to know of it. We also need to check these schemes at that level (of promotion)," Pilot said.
Advertisements that promise unrealistic returns must raise eyebrows and such promotions should be filtered out, he added.
The government would soon come out with a comprehensive set of guidelines for tackling these illegal money-pooling activities and take steps to prevent dissemination of false information to the public, Pilot told PTI in an interview.
Various ministries, including Corporate Affairs and Finance, departments and regulators are working on ways to curb the menace like the recent Saradha chit fund fiasco in West Bengal that duped many people with false promises.
In May, the government had set up an Inter Ministerial Group (IMG) -- that includes members from Finance and Corporate Affairs Ministries, banking regulator RBI and capital market watchdog Sebi -- to suggest measures to tackle ponzi menace.
"The IMG has met many times and very shortly the government will come up with a list of suggestions (to tackle) all these sort of illegal operations of companies such as under the garb of X and doing Y activity and raising funds illegally, disseminating false information," Pilot said.
Asked whether these guidelines would include a ban on advertisements for ponzi schemes, Pilot said: "I would certainly suggest that in the guidelines."
On ways to curb illegal collective investment schemes, the Minister already had discussions with Sebi chief U K Sinha and the capital markets regulator is already taking a number of actions against fraudulent entities.
Sebi was recently given additional powers to regulate all kinds of money collection schemes involving Rs 100 crore or more.
"It does not matter, who is regulating is not important, what must be regulated and people should be protected that is important. We must take on responsibility and not say it is yours not mine... Ultimately, we should all work together," Pilot said.
Delving into the issue of false information getting disseminated to the larger public, Pilot emphasised that "even those publicising these advertisements must act in a self conscious way".
"... All the information people are getting is through the media, whether it is local, bilingual, print or electronic media.
According to him, there should be some kind of filtration to check misinformation getting spread to the public.
"For example, on television you don't see advertisements on alcohol, cigarettes etc that are prohibited by law. There are certain things that should not be shown on the Internet... Similarly, there are other restrictions," he added.
To create more awareness and crackdown on publicity of misinformation, the Corporate Affairs Ministry is also in the process of developing a "comprehensive action plan" to utilise the Investor Education Protection Fund (IEPF) at its disposal.
"We will go in such a way that people are given the right information saying that this is illegal and this is right. We will not advocate the public to do this (a particular thing) but we will make them aware these are the things that they must avoid," the Minister said.
According to him, the IEPF is a large fund which he feels is not being fully utilised.
As part of the awareness campaign, the Ministry would also tap the private sector, NGOs, colleges, public spaces, radio, Internet and print media, among others.
"I have asked the Ministry to ramp up the spending so that we really go pan India in August... This is to make people aware about collective investment schemes, under the garb of so many things people are collecting money illegally," he said.