Ponzi schemes: Govt sets up experts committee to suggest measure to regulator

The Centre has set up an inter-ministerial group to regulate the collection of illegal money through Ponzi schemes and the experts body will identify the gaps in the existing regulatory framework for deposits taking activities.

It will draw the lines for clear demarcation between regulated and unregulated schemes. In addition, it will also suggest the legislative and administrative measures to the regulators.

Informing the Supreme Court that the experts committee has been set up in the Department of Economic Affairs, the Corporate Affairs ministry said the committee was set up in pursuant to the recommendations of the Securities and Exchange Board of India (SEBI).

Besides, the ministry said the Reserve Bank of India (RBI) has also set up state level co-ordination committees to prevent misuse of the money collected from the people falling in the lower income category.

The government has filed its reply on a PIL, filed by one civil society –Humanity Salt Lake seeking direction to bring mechanism to prevent illegal collection of money particularly through chit funds and other Ponzi schemes.

Earlier, SEBI had suggested to set up an experts committee saying due to multiplicity of the regulators and lack of clarity in the legal provisions, some entities have taken advantage and collected money illegally from people in violation of the laws.

The Centre also told the court that the prosecution have been launched against the people who were involved in the chit fund scam. 

The Apex Court is likely to take up the PIL next week.