FM Sitharaman Advises Caution When Dealing With Financial Influencers

At an event in Bengaluru on Sunday (April 23), the Union Minister of Finance, Nirmala Sitharaman said that while the government does not have any proposals at the moment to regulate financial influencers on social media, users should still exercise caution to avoid losing hard-earned money.

“At this stage, I’m not having any proposals before me for regulating them (financial influencers), but yes, a word of caution is important. If there are 3-4 people giving us objective advice, there are 7 others out of 10 who’re probably driven by some other considerations,” said the finance minister.

Sitharaman added that while these so-called fin-influencers are out there, users need to have a very strong sense of caution and due diligence before investing anywhere.

The finance minister also warned against investing in something after being influenced by the number of people already there, stressing on the importance of completing due diligence.

“Don’t go as a flock into something; because someone else has gone into something and you also go without doing your due diligence. We have to be careful, it’s your hard-earned money. You’ve saved it, you’ve earned it, you [have to] protect it,” said Sitharaman at the Sunday event in Bengaluru.

Sitharaman’s comments come months after it was widely reported last November that the markets regulator, the Securities and Exchange Board of India (SEBI) was looking to regulate these financial influencers.

SEBI was also said to be looking at mandating registrations and other norms for social media influencers, on the lines of rules governing registered financial advisors. Though the markets regulator has seemingly yet to finalise the said regulations, going by Sitharaman’s comments on Sunday.

Sitharaman On Ponzi Apps

Sitharaman also spoke about certain investment apps, which reach out to users with false claims of how the users’ money can fetch them good returns.

“Many of these apps are Ponzi, on which we are working with the concerned ministry, MeitY (Ministry of Electronics and Information Technology) and with the Reserve Bank and clamping down on them like never before,” the finance minister added.

The comments come after last October, Hyderabad Police reportedly busted an INR 903 Cr money laundering fraud involving a China-based illegal investment app.

The app would lure users into investing in an investment app called LOXAM, promising high returns. Once the users invested their money, the app would become defunct, leaving many in the lurch.