Delving into Ponzi Schemes - Evolution Impact and Enforcement

Abstract

Ponzi Schemes is not a very complex form of thievery, in fact, they are quite simple. The only job is to dupe the unassuming investors into handing over their money under the guise that it would be placed into some form of investment. Given that it’s a scam, the money is never really invested, yet the “returns” do in turn happen. The question as to how the swindler manages to return the investment is answered in this paper. Furthermore, mushrooming of the Ponzi scheme in India is a common occurrence in the contemporary times, the root cause for such scams could be found in the failure of the formal financial institutions in catering to the felt needs of the people for a savings and thrift schemes by expanding their geographical coverage to all parts of India and a general lack of awareness amongst masses of the distinction between legal and permitted financial products and illegal and unsafe schemes. The article further analyses various Indian cases and assesses the viability of the Laws in force in India and the newly introduced the Unregulated Deposits Schemes (Banning) Act, 2019 and the Unregulated Deposits Schemes Rules, 2020.