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SFIO gets to probe six more illegal money-pooling cases

PTI 25 Oct 2015, 13:41:01 IST

New Delhi: Clamping down on entities running dubious investment schemes, the government has asked SFIO to probe at least six more such cases in last four months alone.

The Serious Fraud Investigation Office (SFIO), which comes under the Corporate Affairs Ministry, is now probing more than 140 cases pertaining to fraudulent money pooling activities.

The probe agency has been directed to investigate at least six more cases where money is believed to have been collected illegally in the name of chit funds since mid-July this year.

"A total of 139 so called 'chit fund' cases have been assigned to SFIO till July 13, 2015, for investigation as well as six more cases have been assigned to it since that date," the Ministry told a parliamentary panel recently.

The ministry's submission was made to the Parliamentary Standing Committee on Finance that looked at the efficacy of regulation of collective investment schemes and chit funds, among others.

Despite multiple regulations in place at both state and central levels, there have been rising instances of people getting duped by fraudulent money accumulating schemes that promise high returns in a short period of time. In many cases, the fraud was perpetrated in the garb of chit funds.

A chit is permissible under Chit Funds Act, 1982, which is implemented by states while money circulation or prize chits activities are prohibited under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The latter is a central legislation and the enforcement action is done by the state governments.

The parliamentary panel, in its report, observed that fund-raising has assumed different forms adopting different business models ranging from instalment schemes to buying agricultural land to unauthorised money collection schemes to dupe the unsuspecting public.

To deal with such activities, the panel said a far greater degree of vigilance, activism and intelligence gathering, sharing is called for by the existing regulators such as RBI, Sebi, Registrars of Cooperative Societies, Registrars of Companies, SFIO and the state enforcement agencies.

"There is a need to quickly identify the underlying nature of the scam so that it can be handed over to the appropriate investigative agency... The state government machinery should be utilised to gather market intelligence about incipient scams and promptly disseminate the same to the investors/prospective investors," the report noted.

Dedicated desks require to be set up for citizens to lodge their complaints as on-line forums for complaint redressal are not adequate. This warrants coordinated action by the regulators concerned and agencies at a decentralised level, it added.

The report was recently submitted to Lok Sabha Speaker Sumitra Mahajan.