Lok Sabha Question No. 3615 (UNSTARRED), answered on 2022-08-08
Subject: Ponzi Schemes
Ministry: FINANCE
Asked by: Raja Amareshwara Naik, Bhola Singh, Sukanta Majumdar, Vinod Kumar Sonkar, Rajveer (Raju Bhaiya) Singh

3615:

SHRI RAJA AMARESHWARA NAIK: SHRI BHOLA SINGH: DR. SUKANTA MAJUMDAR: SHRI VINOD KUMAR SONKAR:

SHRI RAJVEER SINGH (RAJU BHAIYA):

Will the Minister of FINANCE be pleased to state:

- (a)  whether  a  number  of  Ponzi  Schemes floated by  firms/companies/individuals  in  different parts  of  the  country  and  duping  common  people  have  come  to  the  notice  of  the Government;
- (b)  if  so,  the details of such Ponzi firms/companies/individuals identified by the Government during each of the last three years and the current year, State/UT-wise;
- (c)  whether the Economic Offences Wing has busted some rackets of Ponzi Scheme to dupe around millions of people in the country recently and if so, the details thereof;
- (d)  whether the Government has made any arrest in this regard and if so, the details thereof;
- (e)  whether the Reserve Bank of India and Securities and Exchange Board of India propose to make laws/rules for accepting deposits or investment more stringent to counter Ponzi Schemes in near future; and
- (f)  if  so, the details thereof along with the other steps taken/being taken by the Government to put a check on such Ponzi Schemes and save millions of people?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (DR. BHAGWAT KARAD)

(a) to  (d): Government  and  enforcement  agencies  have  taken  action  against  those  running unauthorised  schemes.  As  per  information  received  from  enforcement  agencies  and  regulatory bodies, following are the details:

-  Central  Bureau  of  Investigation  (CBI) :  CBI  has  registered  100  cases  relating  to  Ponzi Schemes during the years 2019 to 2022 (upto 30.06.2022), involving 132 companies/ firms. 21 persons have been arrested by CBI in this regard.
-  Directorate  of  Enforcement  (ED) :  ED  has  investigated  87  cases  related  to  Ponzi  Schemes under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA) during the last 3 years and current year. 8 persons have been arrested by ED in this regard.
-  Serious  Fraud  Investigation  Office  (SFIO) :  SFIO  has  informed  that  it  has  been  assigned investigation by the Ministry of Corporate Affairs (MCA) into the affairs of 9 cases (5 in 2019-20, 1 in 2020-21, and 3 in 2021-22) involving 85 companies (36 in 2019-20, 16 in 2020-21, and 33 in 2021-22) during the last 3 years, which were allegedly engaged in fraudulent Chit Fund/ MultiLevel Marketing (MLM)/ Ponzi activities. No arrest has been made in this regard by SFIO.

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO. 3615

ANSWERED ON MONDAY, 8 th  AUGUST, 2022/ SRAVANA 17, 1943 (SAKA)

## PONZI SCHEMES

-  Reserve Bank of India (RBI) : The Sachet portal of RBI, which is the online platform for State Level Coordination Committees (SLCC) and facilitates the public to lodge complaints of financial frauds, received 1540 complaints related to non-repayment of deposits and money collected for various kinds of Investment Schemes (964 in 2020-21, and 576 in 2021-22).
-  Securities  and  Exchange Board of India (SEBI) :  SEBI  has  passed final  Orders  against  29 unregistered Collective Investment Schemes (CIS) entities during the last 4 years (12 in 201819, 10 in 2019-20, 5 in 2020-21 and 2 in 2021-22).

(e) and (f) : In order to tackle the menace of illicit deposit taking schemes which dupe people of their hard earned savings, and to protect the interests of people, the following steps have been taken:

-  The Banning  of  Unregulated  Deposit  Schemes  Act,  2019  has  been  enacted  by  the  Central Government.  The Act contains  comprehensive provisions  in  this  regard prohibiting  promoting, operating,  issuing  advertisements or  accepting deposits  in any  Unregulated  Deposit  Scheme, and provisions for severe punishment and heavy pecuniary fines to act as deterrent.
-  29  States  /  Union  Territories  have  passed  Protection  of  Interest  of  Depositors  (PID)  Acts  for taking action against entities collecting money from the public illegally.
-  State  Level  Coordination  Committees  (SLCCs),  which  are  joint  forums  of  financial  sector regulators,  State  Government  officials  and  law  enforcement  agencies  to  facilitate  information sharing  and  coordinated  action  against  illegal  mobilization  of  funds  from  the  public,  were reconstituted in States and Union Territories in April 2014, with the Chief Secretary of the State/ UT as the Chair.
-  RBI had launched a public awareness campaign since 2017 to educate the public about various banking issues, including cautionary messages against falling prey to unsolicited and fictitious offers  received through emails/ SMSes/ phone calls. RBI alerts the public against such offers through press releases and multimedia messages on TV and online.
-  Through RBI's online portal SACHET (https://sachet.rbi.org.in), which was initially launched on 04.08.2016,  the  public  is  cautioned  against  fraudulent  schemes/  entities.  From  the  portal, members  of  the  public  can  obtain  information  regarding  entities  that  are  allowed  to  accept deposits, whether the entity is registered with any regulator, lodge complaints and also share information regarding illegal acceptance of deposits by unscrupulous entities.
-  Recognising  the  need  to  develop  standardized  content  to  meet  the  requirements  of  general audience for financial  awareness  on  important banking  aspects,  RBI has developed  Financial Awareness  Messages  (FAME),  with  target  group  specific  content  for  five  target  groups  Viz., entrepreneurs, Self Help Groups(SHFs), farmers, school children, senior citizens. The content inter alia spreads awareness on Ponzi Schemes and Scams among general audience.
-  SEBI is empowered to regulate Collective Investment Schemes (CIS) under Section 11AA of the SEBI Act, 1992. Further, since investors invest in various Mutual Fund schemes, which in turn invest  in  securities  of  various  companies,  SEBI's  Mutual  Fund  Regulation,  1996  specifies various investment restrictions including single issuer limit, sectoral limit, group exposure limit etc. keeping in view the interest of investors.
-  The Ministry of Corporate Affairs (MCA) conducts investor awareness programs to educate the general public to learn from websites of various Ministries the information published regarding the persons involved in the scheme, etc before making any investment.