Taking steps to curb mushrooming of cos. operating fraudulent investment schemes: Sachin Pilot

New delhi, July 18 : The government has prescribed for strong enforcement of rules and regulations in the new Companies Bill to crack down on companies carrying out unlawful activities operating fraudulent chit-fund and ponzi schemes, corporate affairs minister Sachin Pilot said at an ASSOCHAM event held in New Delhi today.

“The idea is to make sure any company raising money illegally is not allowed to do so and any company doing collective investment schemes under the garb of some other operation should be prohibited,” said Pilot while inaugurating a conference on ‘Companies Bill-2012: Highlights and Insights,’ organized by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“SEBI (Securities Exchange Board of India) has now been given more power to curb unlawful activities like ponzi schemes who collect money from poor people by giving wrongful information,” said Pilot. “Whatever regular requirements to take and enforce actions are required as a regulator have been given to SEBI to take effective and swift action against non-complying companies.”

“The ministry of corporate affairs is fully supporting efforts of SEBI to make sure that we have a regulatory environment where compliance is necessary and people are not duped of their hard earned money,” said Pilot. “Its our responsibility as a government and as a country to protect and fight for people at the lowest rung of the pyramid who are lured into invest in ponzi schemes.”

The minister further said that government is trying to plug the gaps existing between SEBI, RBI (Reserve Bank of India) and corporate affairs ministry and the inter-ministerial group is looking into it. “We’ll amend the laws if needed and we are willing to work together with state governments to fight this menace.”

Expressing the hope that the new Companies Bill will be passed in the monsoon session of the Parliament beginning August 5, Pilot said, “The bill has been passed by the Cabinet and by the Lok Sabha with everybody on board and it is now likely to come up for discussion in the upper house of the Parliament in the monsoon session.”

“It is a very comprehensive and dynamic bill as we have incorporated the best practices followed globally that are important for Indian economy,” said Pilot. “I am hopeful that it will be taken up for discussion and the bill is likely to be then passed and then made into a law.”

Earlier, while addressing the ASSOCHAM conference, minister for heavy industries and public enterprises Praful Patel said, “What we need along with a new Companies Bill is a new way of thinking and a new way of working for economic development and economic upliftment and progress to achieve 9-10 per cent growth.”

“We need to simplify processes and make our systems in tune with those in rest of the world to ensure the global community that our rules, regulations, laws and administration are as transparent as in their own country,” said Patel. “Not many people are coming back to invest in a company unlike before and its not a good sign as today we have more institutional investors and not retail investors in our stock market, we need to change that and the new Companies Bill is a step in the right direction.”

Amid others who addressed the ASSOCHAM conference included Rakesh Singh, president, The Institute of Cost Accountants of India; Rajkumar Dhoot, president, ASSOCHAM; Dr Rana Kapoor, president-elect; Sunil Kanoria, vice-president and D S Rawat, secretary general. INN