JOIN USThe government on Wednesday approved a proposal to amend the securities law and empower market regulator Securities and Exchange Board of India (Sebi) to regulate ponzi schemes and chit funds.
Ponzi schemes have caused tremendous financial and social unrest all across the country, especially in West Bengal, parts of Jharkhand, Bihar and Odisha.
Regulation of chit funds do not fall under the purview of the Sebi. Section 11AA of the Sebi Act 1992 exempts certain schemes or arrangements including chit funds from its domain. The chit fund business as defined in Section 2 of the Chit Fund Act 1982 is also out of the Sebi purview.
The amendment in the Act will give powers to Sebi to carry out search and seizure operations and attach assets. It will have powers to seek information or telephone call data records from any person or entity in respect to securities transaction being probed by it, sources said after the Cabinet meeting.
Currently, Sebi can conduct search and seizure only after approval from the Chief Metropolitan Magistrate, but this provision is often seen as delaying proceedings and hampering the confidential nature of probe.