RBI launches ‘Sachet’ to tackle Ponzi Schemes

While a national legislation to curb the menace of Ponzi Schemes is in the pipeline, as a part of it’s continuous effort to tackle the illegal and unauthorised mobilisation of funds, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have joined hands to launch a new initiative ‘Sachet‘ (सचेत) which will facilitate information gathering and sharing on deposit taking activities..While launching Sachet, Raghuram Rajan, Governor of RBI said,.“Initiating quick follow up and taking cases to logical conclusion by punishing the guilty is paramount to deterring entities in future from carrying out unlawful activity. I hope ‘Sachet’ would help regulators in doing this as much as it would help members of public in depositing their hard earned money with genuine companies by giving them timely information about them.“.While the Supreme Court had questioned regulators like SEBI and RBI for their inaction during the Saradha Scam, the RBI had reconstituted a State Level Coordination Committees (SLCCs) in 2014 for better coordination among financial sectors regulators and state level law enforcement agencies..Which is exactly what Sachet has tried to do..However, in a recent PIL filed in the Supreme Court, SEBI said that Ponzi schemes do not fall under the regulatory purview of SEBI as the same is banned under Chit Fund and Money Circulation (Banning) Act of 1978 which makes concerned State governments the enforcing agency..Given that such schemes typically operate outside the regulatory radar, it becomes difficult for regulators to monitor and then act against these schemes. SEBI has, however, passed interim order against 299 entities, including 76 Collective Investment Schemes and 23 Deemed Public Issues.In this regard, the website has a section for closed user group for communication between SLCCs wherein they may share market intelligence and other information about their activities as well as agenda and minutes of meetings with the country on a real time basis..The regulatory bodies which will form a part of this platform include, RBI, SEBI, Insurance Regulatory and Development Authority of India, Pension Fund Regulatory and Development Authority, National Housing Bank, Registrar of Companies – and entities such as State governments and the Economic Offences Wing..From the functionality point of view, the website neatly enlists various legislations which fall under the respective regulators, under the ‘The Regulators’ section. The website also enlists various state legislations in relation to acceptance of public deposits..Apart from providing to the public a list of entities which have been authorised to accept deposits- at its core- Sachet is a platform which provides the public members an option to file and track complaints against dubious schemes. One can now post alerts about entities soliciting deposits at high interest rates or dubious loans offered at low interest rates and thus facilitate information sharing with the concerned regulator or law enforcement authority..Providing an exhaustive list of entities which are authorised to accept deposits and a continually expanding list of entities which are not, based on complaints and information shared, is another key feature of Sachet..Thus, while under the extant regime, regulators can take action only once the damage is done, Sachet will allow real time sharing of information which will allow regulators to act before such damage is done. This is an excellent example of how the internet and technology can be used to eliminate regulatory blind spots.. (Image: Source)