INVESTOR EDUCATION AND PROTECTION FUND

1. Context

2. About IEPF

• It is managed by the IEPF Authority which was set up in 2016 under the provisions of Section 125 of the Companies Act of 2013.
• The Authority is entrusted with the responsibility of administration of the IEPF, which besides promoting awareness among investors makes refunds of shares unclaimed dividends matured deposits and debentures and so on to rightful claimants.
• As for investment education, the idea is to reach out to household investors, housewives and professionals alike in rural and urban areas and teach them the basics.
• Focus areas include primary and secondary capital markets, various saving instruments, the instruments for investment (such as mutual funds and equity among others), making investors aware of dubious Ponzi and chit-fund schemes and existing grievance redressal mechanisms, among other things.
• Until the end of October, it had conducted more than 65, 000 awareness programmes covering 30 lakh citizens.

3. Concern about cryptocurrency

• The Crypto dilemma stems from concerns about unregulated currency having a destabilising effect on the monetary and fiscal stability of a country.
• Further, crypto exchanges in India are being investigated for their alleged involvement in unlawful practices such as drug trafficking, money laundering, violating foreign exchange legislation and evasion of GST.
• As on December 14, proceeds of crime amounting to ₹907.48 crores have been attached or seized, three persons have been arrested and four prosecution complaints have been filed before the Special Court, Prevention of Money Laundering Act (PMLA).

4. RBI recommendations 

• The Reserve Bank of India has recommended framing legislation on the sector.
• It is of the view that cryptocurrencies should be prohibited.
• In a written reply to the Lok Sabha recently, the Minister of State for Finance stated that crypto assets are by definition borderless and therefore any legislation (for regulation or banning) would require international collaboration to prevent regulatory arbitrage.
• The collaboration must entail an evaluation of risks and benefits and the evolution of common taxonomy and standards.

5. Outreach programme

• There are two concerns: As part of the outreach programme, there has to be a regulatory mechanism for the crypto sector.
• The messaging has to be right if the government takes a heavy-handed approach and starts saying things like virtual currency is not legal in India, that will not be entirely true.
• People may presume incorrectly that it is illegal.
• One may be indulging in unlawful transactions like money laundering using crypto assets.
• But unlawful transactions can also be executed using legal banking channels as well.
• Cryptocurrency investing can be a complex and risky endeavour as the category is extremely volatile and works round the clock.
• It is important for potential investors to thoroughly educate themselves before making any decision.

6. About Online Gaming 

• The Ministry of Electronics and Information Technology (MeitY) has been appointed the nodal industry for online gaming in India; for e-sports, the nodal agency is the Department of Sports, under the Ministry of Youth Affairs and Sports.
• A proposed framework for Central regulation by MeitY is expected to address issues faced by the sector.
• For instance, there is confusion about the definitions of a "game of chance" like fantasy games and a game of skill, a term which has been used in the Public Gaming Act (1867) but has not been spelt out.
• There are risks from Cybercrimes as well.
• In the game of skill, while the element of chance cannot be entirely ruled out, it is the element of skill (mental or physical skill of the user) that plays a dominant role in determining the outcome of the game rather than pure chance.

7. Supreme Court Rulings

• A glance at the rulings of the Supreme Court and several High Courts establishes "Games of Skill" as legitimate business activities protected under Article 19 (1) (g) of the Indian Constitution.
• These rulings have also emphasised a clear distinction between "Games of Skill" and "Games of Chance".
• Despite these court rulings, online skill games have faced restrictions in a few states due to addiction, financial losses and the thin line between skill and chance.
• The online gaming industry has become increasingly concerned with the menace of offshore illegal gambling websites that provide their services and rampantly advertise to innocent Indian users, often masquerading as legitimate gaming platforms.
• It has become increasingly difficult to differentiate between good and bad operators.

For Prelims & Mains