Description
Nirmala Sitharaman urged people to be careful not to follow financial influencers. Finance Minister Nirmala Sitharaman warned the public on Sunday about the risks of following financial influencers on social media platforms, saying many of them are motivated by ulterior motives or promote fraudulent schemes. Speaking at an event in Bangalore, Ms Sitharaman said that while there are real experts who offer good advice on investing and saving, there are also many who mislead people or lure them into dubious apps that promise high returns but are actually Ponzi schemes.
"I don't have any proposals to regulate them at this time," he said. “But yes, one caveat is important. If there are three or four people who give us good advice, there are seven out of 10 who are probably motivated by other considerations."
"There are also apps that say your money will get you that amount. Many of them are Ponzi schemes. We should double check. We have to be careful," he said.
He added that the government was working with the Ministry of Electronics and Information Technology (MEITY) and the Reserve Bank of India (RBI) to crack down on such apps and protect citizens' hard-earned money.
The comments come amid a debate about the need for regulation and consumer protection in India's booming stock market, given the rise of financial influencers on social media.
India has seen a rise in retail share of the stock market since the start of the COVID-19 pandemic, as low interest rates and lockdowns led people to seek alternative sources of income.
But many of these investors lack financial knowledge and experience, leaving them vulnerable to manipulation and misinformation.
Several Telegram channels and YouTube accounts have come under scrutiny in recent months for offering advice and recommendations on paid stocks without proper disclosure or warning.
Some of them were also involved in pump-and-dump schemes, where they artificially inflated the prices of certain shares and then sold them for a profit, leaving their followers at a loss.
The Securities and Exchange Board of India, the country's capital market regulator, has sought to crack down on these abusive practices and educate investors on the risks involved.
It recently issued a public notice urging investors not to trust unverified sources of information and to report suspicious activity to its helpline.
