Sebi warns public against high returns via illegal schemes

Market regulator Sebi today cautioned investors and the general public against entities making false promises of exorbitant returns through schemes being run without regulatory approvals.

In a public notice, the Securities and Exchange Board of India (Sebi) observed that some companies or entities are illegally mobilising funds from the public by making false promises of exorbitant rates of return under various schemes.

These companies are also indulging in issuing Cumulative Convertible Preference Shares (CCPS)and Cumulative Redeemable Preference Shares (CRPS) without the necessary authorisation and regulatory approvals, Sebi said.

Schemes made or offered by cooperative societies, deposits accepted by NBFCs, by companies declared as Nidhi or a mutual benefit society under relevant sections of the Companies Act, or pension and insurance schemes framed under the Employees Provident Fund, or chit funds are outside the purview of Sebi's jurisdiction, the regulator said, adding that their returns, therefore, cannot be guaranteed by it.

This warning comes in the wake of Sebi receiving complaints and communications from investors with regard to huge returns offered by various cooperative societies, including those linked to entities already under Sebi's scanner.

Sources said certain entities are taking the cooperative society route to garner funds from public investors after being barred by Sebi for running illegal schemes collecting money through various bonds and other securities.

While Sebi has informed the investors concerned that such schemes are not under its jurisdiction, their modus operandi is still being investigated as it has the powers to crack down on all illegal collective investment schemes worth Rs 100 crore or more.

In its public notice, Sebi said that "investors are cautioned not to invest in any schemes/arrangements which are unregulated. Sebi does not guarantee the repayment of money by these companies/entities."


  • Everybody who contributes to India’s economic growth must be paid well

    Private sector blue chip companies are known to pay top dollar for top-level talent. Directors in such companies take home hefty pay packets.


Stay informed on our latest news!


Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs


Amita Sharma

Smart cities for the smart citizens

The 21st century has been spoken of as the urban ...

Zehra Naqvi

The prejudiced childhood

Sometimes the most unusual things can remind you of the ...

Bubbles Sabharwal

Women of the world, unite for a change

Last week I attended the Women in the World forum ...


William D. Green

Chairman & CEO, Accenture