Ponzi schemes can't be matched on return claims: Sebi chief

Tags: News
Pitching for easier access by common investors to genuine financial products to take on the ponzi menace, capital markets regulator Sebi has said there are many good products available, although they cannot match tall claims made by illicit funds.

"No good product or no legitimate investment can guarantee a 20-30-40 per cent return year-on-year, which some of these products claim to offer.

"No legitimate financial activity in this country can match the promises made by such illegal and unscrupulous fund providers. That is a fact. These schemes cannot be matched, because they are fraudulent," Sebi Chairman U K Sinha said.

He was replying to a question on whether these ponzi schemes promising huge returns to investors were mushrooming because of a lack of good genuine products in the market.

"So, the question arises that whether there are good products available. The answer is, yes, there are plenty of good products available in the market," Sinha told PTI in an interview.

"While these good products can't compete with any of the unscrupulous products, more importantly, the procedure or transaction of those (good) products is still a problem in remote areas and rural parts of the country," he said.

Flagging the problems coming in the way of right products reaching the common investors, the Sebi chief said, "If you are a villager or living in a small town, you perhaps do not have access to certified mutual fund advisors."

Having identified these bottlenecks, Sinha said, Sebi has begun working on ways to make it easier for the common investors to access genuine products.

Over the past few years, there has been a major spurt of illicit schemes, many of which are of the nature of ponzi funds where investors are initially given huge returns from the money collected from new investors and at a later stage the operator vanishes leaving all investors in lurch.

Sebi itself has been cracking down on various illicit money-pooling investment frauds, while it has also been granted greater powers to tackle this menace.

Listing out other steps to ensure that investors are provided access to right products, Sinha said, "What we have done is that in partnership with mutual fund industry body AMFI (Association of Mutual Funds in India), we have identified certain districts in the country where we have decided to focus more."

"The way these 85-86 districts have been identified is that these are the districts where bank deposits are very high and the penetration of capital market products is very low.

"This means that people have got surplus money there and they are using the banking system, but not using the capital market instruments," he added.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Those willfully defaulting on loans should be blacklisted by Sebi

    As reported by this newspaper’s Monday edition, the Securities and Exchange Board of India (Sebi) has found merit in the Reserve Bank of India’s s

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Kumar Jain

Kickstarting technological innovation

One of the key dimensions of global competitiveness is the ...

Kuruvilla Pandikattu SJ

Developing moral, spiritual capacity

Writing in The Huffington Post, Noam Chomsky, professor emeritus, MIT ...

Gautam Gupta

Manufacturing must keep workers’ welfare in mind

It may be early days yet, but the labour reforms ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture