Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
prelims Test Series 2019
बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. Collective regulation: Comment on recently launched web portal to check collective investment schemes financial sector regulators collectively.
Aug 08, 2016 Related to : GS Paper-3

Ans :


Recently financial sector regulators the RBI, SEBI, IRDAI and PFRDA have launched web portal to coordinate their efforts in the battle against collective investment schemes. They will be joined in this effort by the National Housing Bank and Registrar of Companies besides State government agencies.

Issues of collective investment schemes-

  • Various fraud collective investment schemes have ruined prospects of Investors.
  • Collective investment schemes threaten the stability of the financial system and have proved hard to put down in the past.
  • Such schemes generally operate below the radar through word of mouth and manage to stay out of the regulator’s sight.
  • Again, they come in various forms such as jewellery savings schemes, chit funds, pyramid schemes and even plantation schemes.
  • It is therefore not easy for conventional regulatory methods and systems to spot such schemes before they cause damage.

How web portal works?

  • The idea of a website to call out those offering dubious investment propositions are an excellent example of how technology and the internet can be leveraged to eliminate blind spots in regulation.
  • The website will enable regulators to receive on-the-ground information direct from investors who are affected. Investors can report on the website their complaints for non-receipt of interest/dividend or capital and even flag off schemes that they see as suspicious.
  • The advantage is that regulators can access information real time and act before damage is caused.
  • For their part, the regulators can use the portal to disseminate information on entities and schemes that they may ban from time to time.


  • Given that there are multiple regulators in operation, coordination among them is important in the implementation and follow-up. The existence of the portal should be well publicised.
  • The portal, which is in English now, needs to be offered in Indian languages too as collective investment schemes typically thrive in non-urban areas where people are more comfortable in their language.
  • The portal should also be optimised for use in smartphones or there should be the option of an app as people increasingly shift to hand-held devices to access the internet.
  • One option will be to make it mandatory for all entities raising money from the public through deposit schemes to prominently display the web address on their deposit application forms or websites so that investors get familiar with it.


The idea of having collective web portal among various financial regulators against fraud collective investment schemes is welcome move. But it should be effective in its implementation. The idea of a portal to watch illegal deposit schemes is good, but it needs to be taken to the people to be more effective.

Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.