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Parliamentary panel pulls up States for ‘tardy’ implementation of rules on Ponzi schemes

It additionally really helpful amending the rules to offer for ‘appropriate penalty’ to discourage newspapers in addition to celebrities from endorsing fraudulent deposit schemes.

A parliamentary panel has pulled up State governments for “a lax and nonchalant attitude” in implementing the essential “banning of unregulated deposit schemes” laws, whereas additionally recommending amending the rules to offer for “appropriate penalty” to discourage newspapers in addition to celebrities from endorsing fraudulent deposit schemes.

The Committee, headed by Member of Parliament Partap Singh Bajwa, in its report on ‘The Banning of Unregulated Deposit Schemes Rules, 2020’, tabled in Parliament on Wednesday, famous that the tardy tempo of implementation of rules by States and Union Territories was disheartening.

“The Committee, therefore, recommends that the Ministry [of finance] should strengthen its enforcement mechanisms so as to ensure that the objectives of the rules, which have a wide bearing on public interest, are achieved in letter and in spirit,” it mentioned.

It additional really helpful the setting up of a committee/group of specialists, headed by a senior bureaucrat or some famend knowledgeable/economist, having sound data and background in monetary issues, to observe the implementation of these rules and report or make suggestions in regards to the issues confronted in implementation.

Appropriate penalty

Stating that it was essential that solely such schemes had been marketed which had been prima facie real and handed the check of due diligence, the Committee really helpful that the Act/Rules be amended to offer applicable penalty, civil if not prison, to discourage the newspapers and different publications from offering any kind of endorsement to fraudulent deposit schemes.

In case of movie star endorsements, the Committee said that they performed an important function in growing consciousness and visibility of a selected product/service, therefore influencing buyer decisions in deciding on that individual product/service.

While welcoming the availability in legislation for such celebrities to make sure that the claims made of their endorsements weren’t deceptive, the Committee mentioned for the reason that “celebrities with deep pockets charge huge sums of money, often in lakhs and crores, in lieu of their endorsements, the fine under this Section needs to be imposed heavily so as to serve as a credible deterrence.”

It additional added that the phrases of endorsement contract and the character and extent of the fraud in scheme may additionally be taken as related issues whereas deciding on the precise quantity of the tremendous to be imposed. “The Committee recommends that the celebrity concerned may also be asked to come forth and publish a clarification/apology for endorsing any fraudulent scheme which has duped people.”

It has additionally really helpful the Act or the Rules be amended to include provision offering for experience, expertise and area data in coping with monetary frauds/crimes, to be able to be eligible for appointment as competent authority.

“…the Ministry should lay down clear guidelines on what constitutes a deceptive scheme and there should be no ambiguity on it. This would enable people to discern whether a scheme is illicit or genuine,” it mentioned.

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