Body to check ponzi scams on anvil | delhi | Hindustan Times
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Body to check ponzi scams on anvil

After the huge disclosure regarding Saradha Group's ponzi scheme, the government is examining afresh the need for a separate central body to monitor and regulate such multilevel marketing (MLM) schemes. Sanjib Kr Baruah reports.

delhi Updated: Apr 25, 2013 00:23 IST
Sanjib Kr Baruah

After the huge disclosure regarding Saradha Group's ponzi scheme, the government is examining afresh the need for a separate central body to monitor and regulate such multilevel marketing (MLM) schemes.

But doing so would require some legislative legwork.

Such chit fund ponzi schemes or MLM schemes are regulated under the Prize Chit and Money Circulation Scheme (Banning) Act, 1978 (PCMCS Act) which is a central act. The actual powers are entrusted with the state governments and as such taking prevention and enforcement action is the prerogative of the states.

"The problem also lies in the fact that state police authorities are not trained in financial investigation and also not empowered to prevent the commencement of the offence," a top finance ministry official told HT.

"And by the time, the state police take action after filing of the FIR, the operators disappear after cheating the gullible public."

This is exactly how the Saradha fraud story is unfolding.

Of late, various government agencies had already been pressing for addressing of the threat posed by MLM schemes.

"The biggest advantage of a central monitoring body that would collect and collate intelligence and information is that it would be able to take pre-emptive action which would prevent defalcation of public money which is exactly the case now with the Saradha Group," the official said.

Already many government agencies have taken suo moto action based on media reports and have sought details of the Saradha scam.