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.

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"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 said. 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.
PTI