Tuesday, December 3, 2013

PIL seeks clampdown on unauthorised deposit schemes

New Delhi : The Supreme Court Tuesday issued notice to the centre, RBI and market regulator SEBI on a PIL seeking a clampdown on all unauthorised and illegal deposit schemes including collective investment schemes and prosecution of violators.

The public-interest litigation sought directions for the recovery of the money mobilised by unauthorised and illegal schemes so that the same could be returned to gullible investors.

The notice was also issued to the ministry of corporate affairs, Serious Fraud Investigation Office and the Directorate of Enforcement.

"It seems to be a problem in all the states, all over India," observed Chief Justice P. Sathasivam as the bench including Justice Ranjana Prakash Desai and Justice Ranjan Gogoi issued notice on the PIL returnable in four weeks.

The court's notice came on the PIL petition by NGO Humanity which said: "The menace of Ponzi schemes has shaken the very foundation of rural and semi urban economy in India.

"The problem of innocent poor people being robbed of their last savings by greedy, well-organised outfits has remained a fact of life in other parts of country as well."

Seeking making access to banking facilities a "legal right", the PIL that was addressed to the court by counsel Prashant Bhushan said: "Recently big frauds like Sahara scam, Saradha scam etc. have come to light, but they are only the tip of the iceberg.

"The problem of unscrupulous companies collecting deposits from crores of poor people, in violation of guidelines issued by the RBI and the SEBI, has reached menacing proportions and no effective action is being taken."

The PIL urged the court to direct the Reserve Bank of India that banking services are available to people in rural and semi-rural areas by "opening more rural branches, increasing the use of technology to access the less affluent depositors, by lowering the 'know your customer' (KYC) norms, having lower minimum deposit thresholds, mobile vans and other such measures".

Seeking setting up of an independent expert body with requisite powers of investigation, prosecution and recovery of money and that would also look into complaints on financial frauds, the PIL sought an investigation by the Central Bureau of Investigation (CBI) into the large-scale financial fraud, including the Saradha scandal.

The PIL said that all these companies, unauthorisedly collecting savings of small depositors, are in breach of the Company Deposit Rules 1975 which prohibits their operations which are unsecured.
Courtesy:
Submitted by admin4 on 19 November 2013 - 5:56pm
By IANS,
http://twocircles.net/2013nov19/pil_seeks_clampdown_unauthorised_deposit_schemes.html

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