Govt. Will Ban All Ponzi Schemes In India – No More QNet, Saradha, IMA Type Ponzi Frauds

Govt. wants to ban all Ponzi schemes in India
Govt. wants to ban all Ponzi schemes in India

Finance Minister Nirmala Sitharaman introduced the Banning of Unregulated Deposit Schemes Bill, 2019 in the Lower House of Parliament to save gullible investors from ponzi schemes.

According to this bill, the government wants to protect the gullible investors who are tricked into getting their hard earned money duped by illegal deposits taking place around the country, caused due to exploitation of regulatory gaps and lack of strict administrative measures such abominable activities.

Banning the Unregulated Deposit Scheme Bill

This is not the first time such an action has been attempted to carry forward. In 2018 too, the ban of Unregulated Deposit Scheme Bill was initiated in the Lok Sabha and after thorough consideration was passed on to Rajya Sabha. However, the House was adjourned on that same day.

So this year, Sitharaman has initiated the same bill in the Lok Sabha amidst noisy protests by Congress members over the ongoing political crisis in Karnataka. Some highlights of the bill are:

  • Provide a comprehensive mechanism to ban the unregulated deposit schemes, besides deposits in ordinary course of business and to protect the interest of depositors.
  • Mechanism to repay the depositors without delay by attaching the assets of the defaulting establishments.
  • Provision wouldn’t apply to deposits in ordinary course of business to not create any difficult for them.
  • No problem for genuine businesses, or individuals borrowing money from relatives for personal reasons.
  • Ban deposit takers from promoting, operating, issuing advertisements or accepting deposits in any unregulated deposit scheme.
  • Strict measures on running of unregulated deposit schemes, fraudulent default and wrongful inducement related to unregulated deposit schemes.
  • Punishment from 1 year to 10 years and a penalty fine Rs 2 lakh to Rs 50 crore.
  • Attachment of properties or assets and subsequent realization of assets for repayment to depositors required.
  • Create an online central database for collecting and sharing information on deposit-taking activities in the country. 
  • Law too will play a major role; state laws and provisions of the legislation to the state governments.

Some Big Ponzi Scams

QNet, a Hong Kong based multi-level marketing company invoked many Ponzi schemes and binary schemes, vacation packages and business tactics which were illegal. Revealing this out, the Cyberabad Police on March 14 sent severe notices to Shah Rukh Khan, Vivek Oberoi and others for their alleged involvement in the QNet scam. It was found out that QNet was one of the biggest Ponzi scams in India, cheating at least three lakh people.

Similar is the case of IMA founder Mohammed Mansoor Khan. He was arrested on July 19 for the alleged Ponzi scam. On June 28, immovable properties worth Rs 197 crore, Rs 98 lakh from 51 bank accounts and Rs 11 crore from HDFC bank held in the Pradhan Mantri Garib Kalyan Deposit Scheme under Prevention of Money Laundering Act, 2002 (PMLA) was found in the Ponzi scheme case, involving Mansoor Khan.

He cheated more than 40,000 middle class and lower-middle-class people.

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