New Delhi: Union finance minister Nirmala Sitharaman Sunday said that there is no proposal as yet to regulate finance-oriented social media influencers, or ‘finfluencers’, adding that the ministry was working to clamp down “like never before” on apps that promise unrealistic financial returns to unwary investors.
Speaking at an event organised by the Bengaluru-based Thinkers Forum — an independent platform that organises lectures, conclaves, conferences etc — the Finance Minister was replying to a question on the growth of finfluencers, and whether there was a plan to regulate them.
“At this stage I do not have any proposal before me for regulating them, but yes, a word of caution is important,” Sitharaman said. “If there are 3-4 people giving us objective, good advice, there are seven others out of 10 who are probably driven by some other considerations.”
The finance minister also said that there has been a profusion of apps that promise investors unrealistic financial returns and that they are no more than Ponzi schemes.
A Ponzi scheme is an investment fraud where existing investors are paid from the investments made by new investors. That is, the new investors do not receive any return on their investments, and often even lose the entire amount.
“There are also apps that are coming out, reaching out to people saying ‘we can do this, we can do that, your money will fetch you this much’,” Sitharaman explained. “Many of these apps are Ponzi, on which we are working with the ministry concerned, which is MEITY (Ministry of Electronics and Information Technology) and with the RBI (Reserve Bank of India) and clamping down on them like never before.”
The finance minister voiced a strong note of caution when it comes to doing due diligence before following the advice of finfluencers.
“So, social influencers and finfluencers are all out there, but a very strong sense of caution is required in each one of us to make sure that we do double-checking, counter-checking, and talk with people (to verify),” she said.
“Don’t go as a flock into something, where because somebody else has done it, you also do it without doing your due diligence,” she added. “We have to be careful, it’s our hard-worked money. You’ve earned it, you’ve saved it, you protect it (sic).”
This cautious approach regarding finfluencers, coupled with a lack of regulation, is in keeping with the Ministry of Finance’s overall approach to cryptocurrencies as well. Although the ministry has, in the past, compared cryptocurrencies to Ponzi schemes and has warned people about investing in them, it has been far from forthcoming about regulating these instruments.
(Edited by Anumeha Saxena)
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