India to Crackdown on Ponzi Schemes
World Economy

India to Crackdown on Ponzi Schemes

India plans legislation to close a regulatory loophole that has made it possible for fraudsters to dupe millions of savers, as Prime Minister Narendra Modi strives to bring the rural poor into the mainstream banking system.
Unscrupulous operators have bilked savers of billions of dollars by running pyramid schemes or promoting questionable investments in everything from tree plantations to farming emus, a flightless bird, Reuters reported.
The most notorious has been Sahara, whose founder Subrata Roy was jailed in 2014 after failing to comply with a Supreme Court order to repay money raised under deposit plans later ruled illegal. The court has asked Sahara to return $5.4 billion to investors in those banned plans.
“Our aim is to take steps so that there are no more scams like Sahara in future,” said Nishikant Dubey, a member of parliament’s standing committee on finance from Modi’s ruling Bharatiya Janata Party.
Parliament could consider a bill in July that would replace weak rules that now govern credit cooperatives operating in more than one state. These are now overseen by just 10 staff at the Agriculture Ministry.
The officials lack the resources to monitor such savings groups and, one told Reuters on condition of anonymity, have faced pressure to turn a blind eye from politicians who personally profit from them.

  $10 Billon Lost
India does not have a unified regulatory regime to counter Ponzi, or pyramid, schemes whose operators typically grab new deposits to meet their promise of guaranteed returns to existing savers.
Such schemes can snowball but are doomed to eventual collapse when they run out of new savers. Federal investigators are probing cases in which 60 million savers have lost some $10 billion.
The lack of sanctions means that kingpins behind failed deposit schemes are rarely punished.
The Securities and Exchange Board of India does have the power to freeze operations at, and investigate, suspected fraud at collective investment schemes that raise over one billion rupees ($15 million) and fall under its purview.
But, say lawmakers, stronger sanctions are needed to protect poor people who often save tiny sums for a rainy day. India’s 1.3 billion people live on an average income of $3.60 a day in 2011 dollars, the World Bank estimates.
“The looseness in implementation of state acts, including looseness at the SEBI end, has helped fraud operators to loot the people,” said Kirit Somaiya, president of the Investors’ Grievances Forum and another lawmaker from Modi’s ruling party.


Short URL : http://goo.gl/X1CDSQ
  1. http://goo.gl/VPzzOh
  • http://goo.gl/9TvZ2z
  • http://goo.gl/YiXXek
  • http://goo.gl/1UZT3c
  • http://goo.gl/SgK2A5

You can also read ...

ECB President Mario Draghi (L) and US fed chair Jerome Powell at the ECB Forum on Central Banking in Sintra, Portugal, June 20.
The world’s most-powerful central bankers warned that...
Consumer prices rose just 0.1% in May, down from a 0.3% gain in April.
Canada’s economy showed unexpected weakness in the second...
Brazil CB Holds Rate Steady
For the second consecutive time, the Central Bank of Brazil...
China Trade Surplus Shrinks
China’s trade surplus shrank markedly in the first five months...
Inflation rate forecast for the full year is averaged around 3.1%.
Saudi Arabia is so intent on changing its identity that today’...
Turkey Sees 22% Yearly Decline in FDI
Turkey attracted some $3.1 billion in net international direct...
Ukraine Shadow Economy Drops to 31% of GDP
Shadow economy in Ukraine dropped by 4% in 2017, to 31% of GDP...
IMF to Lower Eurozone Growth Projections
The International Monetary Fund will downgrade growth...