Financial scams wash away petty investors earnings; fraud cases mushroom

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Published: July 30, 2019 12:40:30 PM

Incidence of financial scams has shot up by 42 per cent in the last three years. These cases involve luring the customers to invest their hard-earned money for lucrative returns.

fake schemes, ponzi schemes, petty investors, lok sabha, ministry of finance, sebi, cbi, rbi, deposits, equity, convertible bondsComplaints related to non-payment of deposits and investments in ponzi schemes rose from 1,461 in 2016-17 to 2,081 in 2018-19. (Bloomberg image)

Incidence of financial scams has shot up by 42 per cent in the last three years. These cases involve luring the customers to invest their hard-earned money for lucrative returns. Complaints related to non-payment of deposits and investments in ponzi schemes rose from 1,461 in 2016-17 to 2,081 in 2018-19, Anurag Thakur, MoS, Ministry of Finance, replied to a query in Lok Sabha. The minister added that 12 per cent of the total cases of unauthorised payments relates to West Bengal. Securities and Exchange Board of India (SEBI) has passed orders against several entities related to collective investment schemes and issuance of equity shares or convertible securities for non-compliance of SEBI regulations in the last four years.

Ministry of Corporate Affairs has also sought investigation of 109 companies, which are believed to be involved in investment scams including chit funds. The MCA has assigned these scams to the Serious Frauds Investigation Office. Apart from the MCA, CBI has also registered 166 fraud cases related to chit funds and ponzi schemes in the last four years.

To check and reduce the number of cases related to financial scams, the parliament unanimously passed the ‘Banning of Unregulated Deposit Schemes Bill, 2019. The bill entails provisions that will help to tackle fraud deposits and ponzi schemes, which will eventually protect the interests of depositors. The bill also bans deposit takers from promoting, issuing, operating, advertising and accepting deposits in unauthorised deposit scheme, replied Anurag Thakur in Lok Sabha.

The central bank has cautioned the investors about fake deposit schemes from time to time and the ministry of corporate affairs itself conducts investor awareness programmes but the fake lucrative offers of multiplying the money in a short span of time overshadow the caution and the risk involved.

The lucrative returns offered by these ponzi schemes usually target petty investors, who put comparatively smaller amounts in these investments. However, these small amounts have turned out to be the lifelong savings of many in the past.

 

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