Setting up of the IMG is latest in a slew of steps taken by the government in the wake of Kolkata-based Saradha Group cheating investors through fraudulent money pooling scheme.

"The Group (IMG) is expected to strengthen the existing coordination mechanisms for regulation and supervision of financial sector," the Finance Ministry said in a statement.

The high level panel, headed by Department of Financial Services' Additional Secretary, will have representatives from Corporate Affairs Ministry, RBI and SEBI.

"The first meeting of the Inter-Ministerial Group is scheduled for May 16, 2013," the Finance Ministry said.

The IMG has been set up to ensure "proper enforcement of regulatory framework for multi-level marketing companies, non-banking finance companies and companies running collective investment schemes".

Joint Secretary level officers from the Department of Economic Affairs, Department of Revenue, Corporate Affairs Ministry, the RBI and SEBI are part of the panel.

Many entities have registered themselves as chit funds but are found to be raising money illegally through fraudulent schemes or ponzi schemes by promising high returns.

Ponzi schemes are activities involving collection of money from a large number of public investors with a promise of huge returns, which are typically paid from the deposits taken from new investors. Existing investors and agents get hefty commissions for bringing in new investors.

A multi-agency probe that included RBI and SEBI is already underway against entities suspected to be engaged in ponzi schemes.

The Enforcement Directorate has also registered a case of suspected money laundering activities against Saradha, its chief Sudipta Sen and others. Also read is income from mutual funds taxable

PTI