Government’s Action Plan to Combat Ponzi Scams

In response to the rising concerns over the proliferation of Ponzi apps and their unbridled promotion by financial influencers on social media platforms, Shri Sujeet Kumar raised Unstarred Question No. 1836 in the Rajya Sabha. The query sought insights into the government’s awareness of the issue and the details of the action plan devised to regulate these fraudulent applications.

Understanding the Issue:

In his response, Dr. Bhagwat Karad, the Minister of State in the Ministry of Finance, shed light on the steps taken by the government to control fraudulent loan apps and unregulated deposit-taking. The focal points of the action plan included:

(a) Awareness of Ponzi Apps: The government is well-aware of the proliferation of Ponzi apps and their promotion on social media platforms.

(b) Government’s Action Plan:

1. Banning of Unregulated Deposit Schemes Act, 2019: Enacted by the Central Government, this legislation comprehensively prohibits the promotion, operation, issuance of advertisements, or acceptance of deposits in any unregulated deposit scheme.
2. RBI’s SACHET Portal: The Reserve Bank of India’s online portal, SACHET, acts as a cautionary platform. It provides the public with information about entities allowed to accept deposits, their registration status with regulators, and facilitates the lodging of complaints.
3. Regulatory Guidelines on Digital Lending: The RBI, based on the recommendations of a Working Group on digital lending, has laid down regulatory guidelines. These guidelines aim to strengthen the regulatory framework for digital lending, enhance customer protection, and ensure the safety of the digital lending ecosystem.
4. I4C’s Analysis of Digital Lending Apps: The Indian Cybercrime Coordination Centre (I4C) under the Ministry of Home Affairs proactively analyzes digital lending apps. Apps identified as suspicious are reported to the Ministry of Electronics and Information Technology (MeitY) for blocking.

(c) Reasons for Non-awareness: The government is fully aware of the issue, and comprehensive steps have been taken to regulate and control fraudulent loan apps and unregulated deposit-taking.

Creating Awareness:

To create awareness against fraudulent apps, the government has undertaken initiatives such as:

• RBI’s Electronic-Banking Awareness and Training (e-BAAT): Focusing on raising awareness about frauds and risk mitigation in electronic banking.
• Financial Literacy Week (FLW): Conducted by RBI, where banks are advised to organize special camps through Financial Literacy Centres (FLCs) and rural branches.
• Dissemination of Cyber-Crime Messages: Public awareness is promoted through SMS campaigns, radio broadcasts, and social media accounts of I4C, highlighting prevention tips and cyber safety.

The government remains committed to addressing the challenges posed by Ponzi scams, ensuring the safety of the financial ecosystem, and promoting awareness against fraudulent apps. With a robust action plan in place, steps are being taken to curb the menace of large-scale Ponzi scams and protect the interests of the public.

*****

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
RAJYA SABHA
UNSTARRED QUESTION NO. 1836

ANSWERED ON TUESDAY, 19th December, 2023/ Agrahayana 28, 1945 (Saka)

Issue of large-scale ponzi scams

1836. Shri Sujeet Kumar:

Will the Minister of FINANCE be pleased to state:

(a) Whether Government is aware of the proliferation of Ponzi apps and their unfettered promotion by financial influencers on social media platforms;

(b) if so, the details of the action plan devised by Government to regulate these applications; and

(c) if not, the reasons therefor?

ANSWER

THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

(DR. BHAGWAT KARAD)

(a) to (c): To control fraudulent loan apps and unregulated deposit taking, following steps have been taken:

• The Banning of Unregulated Deposit Schemes Act, 2019 has been enacted by the Central Government. The Act contains comprehensive provisions to prohibit promotion, operating, issuance of advertisements or accepting deposits in any Unregulated Deposit Scheme.
• Through Reserve Bank of India (RBI)’s online portal SACHET, the public is cautioned against fraudulent schemes/ entities. From the portal, members of the public can obtain information regarding entities that are allowed to accept deposits, whether the entity is registered with any regulator, lodge complaints and also share information regarding financial frauds and illegal
  acceptance of deposits by unscrupulous entities.
• Regarding digital lending apps, RBI based on the recommendations of the Working Group constituted on digital lending, laid down regulatory guideline on digital lending. This aims at firming up the regulatory framework for digital lending while enhancing customer protection and making digital lending ecosystem safe and sound.
• Indian Cybercrime Coordination Centre (I4C), Ministry of Home Affairs (MHA) analyses the digital lending apps proactively. Based on its analysis and complaints reported on the National Cybercrime Reporting Portal, I4C team analyzes Apps on various parameters, and report such Apps to Ministry of Electronics and Information Technology (MeitY) for blocking which are found suspicious.

Further to create awareness against fraudulent apps following measures have been taken:

• RBI conducts electronic-banking awareness and training (e-BAAT) which focuses on awareness about frauds and risk mitigation.
• RBI conducts Financial Literacy Week (FLW) and Banks are advised to conduct special camps through Financial Literacy Centres (FLCs) and rural branches.
• Dissemination of messages on cyber-crime through short message service (SMS), radio campaigns, publicity on prevention of cyber-crime and cyber safety tips through social media accounts of the I4C.

***