Ponzi menace needs better surveillance, not new regulator: RBI
New Delhi: Amid huge amounts of public money being collected via various ponzi schemes, the RBI is of the view that setting up a new regulator might not solve the problem and such illegal activities can only be checked by stronger surveillance and better enforcement of laws.
Also, active involvement of state governments is very important to keep a tab on such activities and take action against the culprits, said Reserve Bank Governor D Subbarao.
While favouring a review of the present legal framework to remove any loopholes, Subbarao said that an amendment of the regulations would not be sufficient to tackle this menace and an effective implementation of laws is more important.
His comments come against the backdrop of numerous cases coming to light about investors being duped of thousands of crores of rupees by ponzi schemes across the country, including in West Bengal, Orissa, Tamil Nadu, Delhi, Bihar, Assam and UP.
Speaking to PTI in an interview on the issue of ponzi schemes and whether there was a need for better regulation, Subbarao said that the problems that have come to the fore are mostly related to illegal and unlawful schemes.
"The problem is not with regulated schemes, the problem is with unlawful schemes, and unlawful schemes are by definition not regulated," he said.
"The ponzi schemes can not be regulated by anyone because they are illegal and illegal schemes are not regulated," he said, but added that it does not mean that the present legal framework was sufficient.
"I would say, may be, we should look at the laws once again. What I am saying is that it (amendment to laws) is necessary but not sufficient. Sufficiency conditions will be met by more effective surveillance and enforcement of law and catch unlawful schemes."