When I look at the poor people who have lost their life saving, several questions come to my mind:
1) Why did it happen?
2) Will it happen again?
3) What will happen to the accused?
4) What can be done to prevent it?
The scam happened because of absence of a banking system that could cater to majority of the people living in villages and remote places with daily earnings/savings of less than INR 100. The companies moved into these areas, promised unrealistic returns and took money from these people on a daily, weekly or monthly basis. These people made these investments firstly, because they had no choice and secondly, out of greed.
Unlike other countries like Bangladesh, which have a microfinance organization and community development bank i.e. Grameen bank, over 60 % of Indian population does not have access to any formal banking. The private banks cater mainly to the urban rich and majority of the people have no place to keep their money safely, leave alone get decent returns on it. The banks require address proof and other documents which these people are not able to provide and ultimately give up on the formal banks. The government has done nothing to address the issues of these people.
Till we are able to develop a banking system that caters to all, without asking for things that they find impossible to provide these scams will continue. No law or law enforcing agency will be able to protect our people, whose education level and exposure to news and media is very limited.
The accused will try their best to get away by saying, that they disclosed the issues and risks to the investors who invested in their schemes out of their free will. They had no intention to defraud the investors and the losses were due to issues beyond their control.
If we have to prevent these frauds, the government will need to come out with a banking system like the Grameen bank. The present policies do not cater to a large percentage of the country that is poor and homeless. Before introducing compliance like the western countries we should work towards the upliftment of our people. If over 25% of the country is homeless and literacy rates are around 60% , we cannot ape banking models of the developed countries.
Disclaimer: The statements and opinions expressed in this article are solely the views of Mr. Mohit Suri. The contents of this document are indicative and are subject to change without notice. MLegal makes no representations or warranties with respect to the information and disclaims all liability for any use you or your advisers make of the contents of this document.
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Even the public sector banks do not want to serve the poor or in the villages. In fact the banking section of the post office should be segregated and turned into a full fledged Grameen Bank. There is no pro-active policy. Persons in the government are more concerned about private banks or Swiss banks.