The ministry is working in tandem with the Reserve Bank of India and the Ministry of Electronics and Information Technology, she said in an interaction with the Thinkers’ Forum of intellectuals, at Tumkur in Karnataka.
“There are apps reaching out to people saying your money will fetch you this much. Many of them are Ponzi and we are clamping down on them like never before,” she said.
A Ponzi scheme is one where old investors are paid returns with money deposited by new investors. The new entrants may not get any returns and, in some cases, they may lose the money they invested. In India, Ponzi schemes are banned under the Banning of Unregulated Deposit Schemes Act, 2019.
Sitharaman also spoke about financial influencers – sometimes called ‘finfluencers’ – saying there was no proposal before her for regulating them yet. She cautioned people about their dangers, saying that for three or four people who were giving good objective advice, there would be seven others who were driven by external considerations. “It is our hard-earned money. You earned it, you save it, you protect it,” she added.
The Securities and Exchange Board of India had said last month that it would come up with a discussion paper on regulating financial influencers. The market regulator had cracked down on entities that were using YouTube and other social media platforms to allegedly hype up a stock and dump it later at a higher price.
Earlier in the day, the finance minister addressed a meeting of the Thinkers’ Forum in Bengaluru, where she praised the central government’s work in dealing with the financial crisis brought on by the Ukraine war and the Covid-19 pandemic. India, she said, had fared better than most countries, and was the fastest growing economy this year, while others were still in recession. She praised Prime Minister Narendra Modi for implementing the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs during the pandemic. “We have widened the implementation of the ECLGS and allocated more funds towards it. We also ensured that amounts were actually sanctioned and disbursed and the scheme did not remain on paper,” she added.
The scheme, which is now a part of the Aatmanirbhar Bharat programme, was launched in May 2020. All small businesses which had loans sanctioned under this scheme got up to 20% collateral-free extra credit. The loans were fully guaranteed by the National Credit Guarantee Trustee Company.