Only recently, the GPlus in one of its main reports – ‘Greed begets grief’ - had highlighted how greed had lured a large number of people of Assam into investing significant sums of their hard-earned money in allegedly dubious investment schemes in the hope of receiving high returns. Initially, the investors did receive what was assured, which egged them on to multiply their investments.
The bubble burst then, and the investors were left high and dry as the operator of the stock broking firm made himself scarce; the police have since been on the hunt for him. No sooner had the news of the fraud that allegedly ran into hundreds of crores moved out of people’s consciousness than more tumbled out, supposedly involving much larger sums and embracing even a section of the elite of Assam. It would appear then that cyber fraud has come to stay in Assam leaving countless citizens already financially devastated.
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While the latest revelations have grabbed eyeballs, reports have it that the Assam Police has recorded over 500 cases of investment fraud in the state in the past year alone, with investor losses amounting to crores. The majority of these cases involve fraudulent schemes promising unusually high returns, often with a promise of "guaranteed" profits. The modus operandi of these investment fraudsters is becoming increasingly sophisticated. They use social media, online advertising, and even word-of-mouth to lure unsuspecting investors into their trap. They promise astronomical returns, often with a sense of urgency, creating a false sense of FOMO (Fear of Missing Out) among potential investors. Once the investors put in their money, the fraudsters disappear, leaving behind a trail of broken dreams and financial ruin.
The impact of investment fraud goes beyond financial losses. It also erodes trust in the financial system, making people hesitant to invest in legitimate opportunities. This, in turn, hinders the state's efforts to promote economic growth and development.
Assam Chief Minister Himanta Biswa Sarma has promised action to root out the menace, which is most welcome to save the people from ruin, particularly those who risk their all – and not just some disposable income – in pursuit of the pot of gold at the end of the rainbow. To bring this ruinous venture to an end, the first task would be to identify what drives it.
Obviously, there has to be multiple factors. Experts cite lack of financial literacy as a key reason that could lead people to invest wantonly to their peril. The absence of effective regulation and oversight is cited as yet another factor. While the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have guidelines in place to regulate investment schemes, the lack of effective enforcement has created a vacuum that fraudsters are said to be exploiting.
Against such a backdrop, Assam government in collaboration with regulatory authorities must first initiate awareness campaigns to educate citizens about the dangers of investment fraud and the importance of financial literacy. That apart, there is a need for putting in place an apparatus to monitor and investigate suspicious investment schemes and enforcing stricter penalties for investment fraud offenses. But above all, it is for the people to be on guard against such frauds for it is their money on the line; citizens must be vigilant and report suspicious investment schemes to the authorities at the very first hint.
