Finance Minister on Sunday said that there is no proposal at present to regulate financial influencers. However, she said that the Finance Ministry, in association with the Ministry of Electronics and Information Technology (MeitY) and Reserve Bank of India (RBI) working to clamp down on ponzi apps.

Responding to a query during her interaction at the Thinkers Forum at Tumakuru (Karnataka), she cautioned people from financial influencers (Finfluencers).  “At this moment, I do not any proposal before me for regulating, but word of caution is important. If there are 3 or 4 people giving us objective advice, there are 7 others out of 10 who’re probably driven by some other considerations,” she said.

In November last year SK Mohanty, SEBI’s whole-time member, had said that the regulator would come out with guidelines for financial influencers, usually referred to as fin-fluencers, who give stock advice on social media platforms. He said stock tips were flowing on social media sans regulations. YouTube channels and social media handles have mushroomed in the past few years with millions of followers. In fact, SEBI has even cracked down on those indulging in manipulation through stock tips on Telegram and WhatsApp, but the regulator has so far lacked any effective regulations.

In March 2022, SEBI unearthed a major racket of stock price manipulation through social media and chatting apps. SEBI had also carried out search and seizure operations at the premises of seven individuals and one entity at multiple locations in Ahmedabad and Bhavnagar in Gujarat, Neemuch in Madhya Pradesh, New Delhi and Mumbai.

Ponzi Apps

Meanwhile, Sitharaman said that the Finance Ministry is working with MeitY and RBI to clamp down on ponzi apps to prevent them from taking away the hard-earned money of unsuspecting  investors. She urged investors to do their due diligence and not be lured by claims of lucrative returns made by them.

Slate: All you wanted to know about Ponzi schemes 

“There’re also apps which are coming out reaching out to people we can do this; we can do that. Your money will fetch you this much. Many of them are ponzi, the apps on which we’re working with concerned ministry Meity & RBI & clamping down on them like never before so that we don’t get those ponzi apps talking away hard-earned money,” she said.

A Ponzi scheme is an investment fraud where existing investors are paid for the investments made by new investors. The new investors do not receive any return on their investments and often even lose the entire amount.

Read: Decoding the Ordinance on unregulated deposit schemes

Further, the Minister said that social and financial influencers are all out there, but a strong sense of caution is required in each of us to make sure people do double check, counter check, and talk with people. “Don’t go as a flock into something because somebody else has gone and you also go there without your due diligence. We have to be careful. It is our hard-earned money. You earned it, you saved it, you protect it,” she advised.

In 2019, the government enacted a law called the Banning of Unregulated Deposit Schemes Act, 2019, which looks to prevent unregulated entities from collecting deposits and duping the poor and gullible of their hard-earned savings.

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