Finmin sets up IMG to tackle ponzi scheme menace

New Delhi: Amid rising instances of people being defrauded by ponzi schemes, the government has set up an inter-ministerial group to suggest ways to tackle fraudulent money pooling activities and protect the interest of investors.

Representatives from the Finance and Corporate Affairs Ministries, Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) will be members of the inter- ministerial group (IMG). The IMG has been set up through the Department of Financial Services, under the Finance Ministry, to suggest steps to tackle the menace of fraudulent money raising schemes and protect investor interests, sources said.

In many cases, people in the rural areas easily fall prey to such schemes. PTI[/caption]

Setting up of the IMG is the latest in a slew of measures initiated by the government in the wake of Kolkata-based Saradha Group cheating many investors through fraudulent money pooling scheme. According to sources, many entities have registered themselves as chit funds but are found to be raising money illegally through fraudulent schemes or ponzi schemes by promising high returns.

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In many cases, people in the rural areas easily fall prey to such schemes. Ponzi schemes are activities involving collection of money from a large number of public investors with a promise of huge returns, which are typically paid from the deposits taken from new investors.

The old investors and agents get hefty commissions for bringing in new investors. Last month, the government had said that entities suspected to be engaged in running ponzi schemes are being probed by Sebi, RBI and the Corporate Affairs Ministry, among others. The Income Tax Department has also initiated an investigation into Saradha group. The Enforcement Directorate has also registered a case of suspected money laundering activities against this Kolkata-based group and others, including its chief Sudipta Sen.

PTI