State proposes to impose ban on money circulation schemes 

STAFF REPORTER

Draft rules empower designated officer to seal offices and close operations

The Odisha government proposes to ban all kinds of money circulation schemes, as hundreds of gullible persons have been duped by many individuals and business entities in the past couple of years.

The draft Money Circulation Scheme (Banning) Rules, 2012, under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, says, “No individual or firm or business association, in any form, shall promote, run, or participate in the money circulation scheme, including earning commissions through sale of products.”

Pyramid structure

The State government, in the draft rules, has explicitly explained what the money circulation schemes are.

Money circulation schemes under pyramid structure, which mean a multilayered network of subscribers to a scheme formed by subscribers enrolling one or more subscribers in order to receive any benefit directly or indirectly as a result of enrolment would be kept under strict observation.

“No individual or company or firm or business association, in any form, shall run a scheme that induces enrolment of new members by offering benefits or commission, by whatever name called, to upline members in the pyramid out of the action or performance like sale or purported sale of goods or services by the downline members,” it says.

Nodal police authority will be submitting periodical information to the Reserve Bank of India about the money circulation schemes.

A competent authority, which would be declared by the State government, would be responsible for taking all actions, including winding up entities indulging in money circulation scheme.

Even as allegations of innocent people being cheated in money circulation schemes kept pouring in every passing day, it is being noticed that promoters are shielding them behind the company floated by them.

The draft rules, however, have proposed to make promoters personally responsible in the event of existence of money circulation schemes.

The draft rules empower the designated officer to seal business premises and offices, seize accounts, and initiate action for closure of operations after receiving reports from the investigating officer.

However, the officer has to be satisfied with the prima facie evidence.

The rules have been proposed after the State government came across money circulations schemes in different forms.

More than 20 cases of financial frauds involving crores of rupees have been investigated by Economic Offence Wing (EOW) of the Crime Branch since April this year.

Panel constituted

Recently, the government had constituted a six-member committee to strengthen the regulatory and supervisory cooperation among agencies of both the State and Central governments with regards to Ponzi schemes – schemes involving chit funds, multilevel marketing schemes, and informal investment schemes.

SOURCE :  http://www.thehindu.com

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