'Streamline norms for co-op societies to curb ponzi schemes'
To curb possible diversion of ponzi proceeds, a Parliamentary panel has asked the government to streamline the regulatory regime for multi state cooperative societies and also come out with a legislation for chit funds.
New Delhi: To curb possible diversion of ponzi proceeds, a Parliamentary panel has asked the government to streamline the regulatory regime for multi state cooperative societies and also come out with a legislation for chit funds.
Multi State Cooperative Societies (MSCS) come under the Agriculture and Farmers' Welfare Ministry while chit funds are regulated by state governments.
"The regulatory regime in respect of MSCS should be streamlined and tightened, so that they do not become an instrument of diverting and shielding illegal funds from ponzi schemes...Necessary steps in this direction should be taken up urgently," the panel has said.
The Parliamentary Standing Committee on Finance has also called for strong time-bound action against all such societies where complaints have been received.
In its submissions to the panel, Corporate Affairs Ministry said there have been complaints that certain companies against whom market regulator Sebi has passed orders for "financial bungling in collective investment schemes" have transferred their funds by forming MSCS.
"The Department of Agriculture, Cooperation and Farmers' Welfare has stated that it is in agreement with the suggestion of the committee that the regulatory regime in respect of MSCSs should be streamlined to protect the interest of the small investors/ members of these societies," Corporate Affairs Ministry told the panel.
Meanwhile, the committee has asked the government to bring in necessary legislation in the chit fund sector during the Winter Session of Parliament.
In recent times, there have been rising instances of people getting duped by illegal money pooling activities in the garb of chit funds and collective investment schemes.
The government is also in the process of bringing a central legislation that would plug regulatory loopholes in order to curb ponzi activities.
Observing that even now several cases of unauthorised collection of money and deposits are being reported, the committee said agencies concerned should work with "greater cohesion and coordination" to ensure concrete results at the ground level.
The committee is of the view that central law on unauthorised deposits and related matters "to be expedited so that a comprehensive Bill can be introduced in Parliament at least during the Winter Session later this year".