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Nodal authority to curb money circulation menace sought
Activist EAS Sarma writes letter to Prime Minster Visakhapatnam: Convenor of Forum for Better Visakha, EAS Sarma, in a letter addressed to the Prime...
Activist EAS Sarma writes letter to Prime Minster
Visakhapatnam: Convenor of Forum for Better Visakha, EAS Sarma, in a letter addressed to the Prime Minister Manmohan Singh, suggested that a single ministry should be designated immediately to act as the nodal authority to co-ordinate with the other ministries, Reserve Bank of India, SEBI, CBDT, Enforcement Directorate, CBI, SFIO and the State Police to detect errant companies.
He said that the nodal ministry should be held accountable to the government for detecting errant companies, acting on the detected cases, suggesting amendments to the existing laws if necessary and to propose institutional arrangements. These money circulation schemes are illegal under the Prize Chits and Money Circulation Schemes (Banning) Act 1978, but in the absence of a clear direction within the government, such companies have been able to have their way.
Earlier too, "I had written on this subject expressing distress on the spurt in the money circulation companies in the guise of multi-level marketing activity swindling millions of households of their hard earned savings', Sarma said. He further noted that the Law Minister was on record before Parliament stating that Speakasia Company swindled 1.2 million households across the country and deprived them of their savings to the tune of Rs 1,300 crore.
Ironically, the company never bothered to register itself under the Companies Act and the Registrar of Companies had no information about its place of business. There are thousands of companies operating literally unregulated and fly-by-night companies of this kind as they know that the government is soft in regulation. These pyramid companies are a scourge to any economy and are known to have destabilised the financial systems elsewhere. Sarma said there is no clear line of authority within the government to deal with these companies and the Ministry of Corporate Affairs has no way to detect such companies operating without registration or to stop such companies from the registration.
"Some State governments have tried to tackle the problem by enacting laws but they need a clear cut support from the Centre." he assert