For the purpose of crackdown of these MLMs, the Rajasthan police have formed a Special Operation Group headed by the Additional Director General (ADG) of Police. This is something like Economic Offences Wing (EOW) of the Andhra Pradesh police
Following the ongoing probe in the multi level marketing firm, Right Concept Marketing (RCM), in Bhilwara district of Rajasthan, the police have registered 24 cases against 10 different ponzi schemes. Moneylife had recently reported that Rajasthan police are probing more MLM frauds after cracking RCM and Gold Sukh. (http://www.moneylife.in/article/rajasthan-police-probing-more-mlm-frauds-after-cracking-rcm-and-gold-sukh/23021.html)
According to the sources, many such MLM companies promising high returns and investment in gold are been investigated. “We came across MLMs promising high returns while investigating RCM. These companies, apart from luring people with schemes which double their money, are promising investment in livestock such as goats. Star Net is one among the 10 companies against whom we have registered complaints,” said an officer close to investigation, preferring anonymity. He adds, “Altogether we have registered 24 complaints. Many of them also have close links with politicians.”
For the purpose of crackdown of these MLMs, sources say, the police have formed a Special Operation Group headed by the Additional Director General (ADG) of Police. This is something like Economic Offences Wing (EOW) of the Andhra Pradesh police.
Meanwhile, according to the sources, there is a possibility of more arrests in the RCM fraud. Further, eight more cases have been registered against it in various districts of Rajasthan including Jalor, Jaipur, etc. “Recently the Rajasthan High Court rejected the bail application as well as the request to quash the FIR by the four arrested officers of RCM,” says the officer.
According to police estimates, the RCM fraud is in the tune of Rs2,000 crore. The business model of RCM, was based on networking where it invited people to become members on the payment of Rs1,500. To avail 10% commission they were asked to recruit more people in the scheme. The company is not registered under the Companies Act.
An officer close to investigation told Moneylife that the bank accounts of the company have been frozen. “The recovery of money will still require time. We are co-ordinating with various central government authorities like Income Tax department.”
In November, last year, ponzi scheme Gold Sukh made headlines after it allegedly duped 1.75 lakh investors of more than Rs300 crore. Gold Sukh promised returns 27 times than the investment in just 15 months and was able to lure many politicians, police officers and businessmen.
Experts said the slowdown in credit growth was on account of the high interest rate regime that has been in place for over a year, as the Reserve Bank of India (RBI) hiked lending rates to rein in inflation
Mumbai: Non-food credit offtake increased 17.1% to Rs44.90 lakh crore during the 12 months to 13th January, amid the high interest rate regime, reports PTI.
It was Rs 38.31 lakh crore during the year to January 14, 2011, RBI data showed.
Until August, the offtake had been growing at over 18% on an annualised basis before it started slowing down.
Experts said the slowdown in credit growth was on account of the high interest rate regime that has been in place for over a year, as the Reserve Bank of India (RBI) hiked lending rates to rein in inflation.
The RBI had raised key lending rates by 350 basis points through 13 hikes since March 2010 to curb inflation which has been above 9% mark for most of last two years.
Meanwhile, deposits rose to over Rs59.61 lakh crore during the 12-month period to 13th January, from Rs50.92 lakh crore during the corresponding period to 14 January 2010.
This translates into a growth of 17%.
In its third quarterly monetary policy review last week, the RBI had said credit growth was likely to slow down as a result of the rate hikes.
The apex bank revised downwards its projection for non-food credit growth to 16% from the earlier estimate of around 17%-18% for this fiscal. Deposit growth has been pegged at 17%.
During FY10-11, bank credit offtake had increased by 21.5%, while deposits had grown only 15.5%.
Indian industry has complained that the high interest rate regime has resulted in slowing down of investment and industrial growth.
Economic growth slowed to a nine-quarter low of 6.9% in the July-September period.
Veteran property lawyer Parimal Shroff speaks on the two real estate regulation Bills
“We can’t really say how effective laws will be by analysing drafts. We must look at legal interpretations of housing regulation rules to see how they will affect the people concerned,” said Parimal Shroff, an eminent property lawyer. He was speaking at a seminar organised by Moneylife Foundation at the Royal Yacht Club on 25th January, on whether the housing regulations will benefit the customers.
Mr Shroff gave a brief outline of the two impending Bills on real estate regulations: the Draft Real Estate (Regulation & Development) Bill, 2011 at the Centre and the Maharashtra (Regulation and Promotion of Construction, Sale, Management, and Transfer) Act. The Maharashtra Act, which has been already passed by the state Cabinet, will replace Maharashtra Ownership Flats Act, 1963 (MOFA).
Mr Shroff pointed out that the Central Act is “too ambitious”. “It proposes that all permissions, information, online declarations and registration are to be validated before the project starts. The penalties for failing to comply are too severe. Then, it requires that the plans and designs to be put up online—this gives rise to problems related to protection of intellectual property and security,” said Mr Shroff. The Maharashtra Bill, which has the stringent provisions largely diluted, he said, is less ambitious, and would be a better bet.
However, he pointed out, the effect of rules and regulations pertaining to real estate have always been subject to legal interpretations. “Regulators become pro-active with passage of time. You cannot really say how the laws will affect you until it is interpreted by the court. Subject to interpretations, amendments will also be made,” he said. He gave example of the Nahalchand Laloochand case. In 2010, the Supreme Court gave a landmark (and much discussed) judgment on whether parking spaces can be sold by builders. The court, by interpreting MOFA, defined the term ‘flat’, which is basically an enclosure whose construction approved by authorities. Parking spaces, are amenities, and can’t be seen as part of ‘flat’, hence can’t be sold.
“While initially, buyers were happy that builders couldn’t sell parking places, things turned bad afterwards. Now, every year, societies auction or arrange lotteries for allotment of parking spaces—which is very inconvenient. Also, considering the friction between society members, it has become a problem,” said Mr Shroff. The Maharashtra Act, attempts to resolve the issue by allowing the sale of car parking area. The Maharashtra Act also talks about compulsory transfer to the society.
There is likely to be friction between the state and the Central laws, because real estate/land issues are a subject on which both the Centre and the state can make laws. “In case of conflict between the two, there will be no resolution. But ultimately, the local law will prevail, because the Central law cannot replace it,” Mr Shroff said while answering a question. A question was asked on what effect the new law will have on societies that are formed earlier. “Of course, it wouldn’t affect old societies, unless there is some retrospective amendment to the existing law. However, in case a dispute arises, the new law will apply,” he said. However, it will be a different case when there is a legal interpretation by a court. “When you interpret, you are not changing the law. So the things implied in the interpretation will apply from the time the law was passed. Old contracts then will be re-evaluated,” he said.
A member of the audience suggested that sale plans may be certified by authorities so that the builders cannot vacillate between super-built up area and carpet area at will. Mr Shroff said that it is difficult to convince any authority to take this responsibility, or for builders to publish interior plans.
Answering a question on whether deemed conveyance is required by every member of society, he said, “When you become a part of society, what the society agrees upon will prevail.” However, he agreed that deemed conveyance has been largely ineffective, and prevailing corruption has made it almost impossible to get a deemed conveyance.
When asked about what rate (prevailing or new) should stamp duty be paid by society in case of deemed conveyance, Mr Shroff said, “In case members have been mistreated by the builders, the government will give conveyance, but you have to pay. Under the Stamp Act, if all members have paid stamp duty at time of purchase, they will be granted exemption from paying again at time of conveyance. However, if a society has some members who have not paid stamp duty till date, the society has to pay according to the current rates. But people who have not paid till date are not likely to pay, and then, good luck for resolving it.” Mr Shroff also said that forming a co-operative society is a better option, because then, the builder ceases to have any control over matters.