Sebi orders PACL to return $8.1b raised from investment scheme

Tags: News
The Securities and Exchange Board of India (SEBI), India's capital markets regulator, has ordered property developer PACL Ltd to return at least $8.1 billion raised from retail investors after finding the company had failed to register its land investment scheme.

The action by the SEBI marks the country's continued scrutiny of companies which raise funds from mostly low-income investors by offering higher interest rates than available on bank savings accounts.

According to the SEBI Order, PACL ran an investment scheme that promised depositors returns on investments in agricultural land. The regulator said the company allowed investors to deposit money in instalments or in a lump sum, guaranteeing returns after a fixed tenure.

Phone calls from Reuters to PACL's office were unanswered.

The amount that PACL has been ordered to return would be well above the $3.7 billion in deposits Kolkata-based media conglomerate Saradha was ordered to return last year, after running an unlawful deposit scheme that went bust.

In a 92-page order issued on Friday, SEBI said PACL's investment product qualified as a so-called collective investment scheme, or deposit-taking payment plan, which should be registered with the regulator.

Although SEBI did not specify how much money PACL would need to return to investors, it estimated the amount raised under the scheme amounted to 491 billion rupees ($8.1 billion), collected from 58.5 million customers.

It said the amount raised could be higher, but it had not obtained records from the company for the period from April 2012 to February 2013.

The regulator said all money raised from the plan would need to be returned to investors within three months and barred the company and its executives from raising any additional money.

EDITORIAL OF THE DAY

  • Right to reveal

    Delhi is India’s first state to announce a scheme for witness protection. But what about the witnesses in other states?

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Urs Schoettli

New masters of the Financial Times

A few days ago, Japan’s leading financial daily Nihon Keizai ...

Anuja Sharma

Focus mindfully to get the result

Have you ever tried to light a fire using the ...

Gautam Gupta

Our fashion schools need to notch it up

“Creativity is the key to success and primary education is ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture