Strict scrutiny of all communications and advertisements, including the antecedents of entities promoting money collection schemes, may soon come into effect.
The move will particularly apply to schemes that call for collection of money from public above a certain limit promising very high returns within a short time.?Sources said the threshold may be set at R100 crore.
Also, all advertisements for money collection schemes may also require the clearance from the Securities and Exchange Board of India (Sebi). A proposal to set up an ad-screening committee within Sebi is also under works, a senior official said. The proposed committee will be required to take a decision on any such requests within a stipulated time frame. These are among the suggestions made by the ministry of corporate affairs (MCA), consumer affairs ministry and the department of financial services to check the growing menace of ponzi schemes.
According to sources, these suggestions have been forwarded to an inter-ministerial group (IMG) which is finalising its report on tackling ponzi schemes. MCA minister Sachin Pilot has also expressed his intent to ban all advertisements pertaining to ponzi schemes run mostly in regional media similar to the bans imposed on tobacco and liquor advertising. “I believe if someone is telling that they will double the money in five months they must be publicising the same in the media. We need to check these schemes at promotion level too,” Pilot had said earlier this week.
MCA had also suggested a complete ban on all financial advertisements pertaining to ‘get-rich-quick’ schemes specially if the promise of higher returns is very short. “The idea is to stop the spread of false information through advertisements as was observed in West Bengal in the case of Saradha Group and others. Cooperation from state governments will also be sought in this regard,” a senior official said.
A senior member of the Parliamentary panel on finance, which also gave its suggestions to the IMG, said: “It will be a good idea to involve district level officials including the district magistrate, police officials as clearing authorities for money collection schemes before they are advertised in the local regional media.”
The IMG on tackling ponzi schemes was set up in late April after the West Bengal-based Saradha Group and Rose Valley Group came under the investigations for alleged financial fraud through the various illegal money collection schemes.
MCA minister has already indicated that the government is planning to bring come out an ordinance to provide more powers to Sebi to tackle fraudulent investment schemes that defraud investors. Pilot said his ministry is working in close coordination with the market regulator to ensure that a regulatory environment where compliance is necessary and people are not duped of their hard earned money.