Fraudulent investment schemes are also known as ponzi schemes. There have been a number of cases, including some high- profile matters like Saradha scam in West Bengal, where lakhs of investors were found to be robbed off their hard-earned money through illegal investment schemes, some of which were in the name of chit funds without being registered so.
"Do not get tempted by promises of high returns offered by entities running Multi-Level Marketing and Pyramid Structured Schemes (Schemes that require you to become a member by making initial deposit and then to canvass more members to maximise your return). Such activities are banned under law," according to a public notice. It has been issued by the Corporate Affairs and Consumer Affairs Ministries along with the Reserve Bank of India (RBI). While stressing that speculative activities and assured returns do not go together, the government has said that unincorporated bodies, including proprietorship and
partnership concerns are prohibited from accepting deposits from public.
People are also advised not to get "lured by online schemes seeking deposits and promising high returns or gifts".Besides, deposits placed with NBFCs (Non-Banking Finance Companies) are neither insured nor guaranteed by the Reserve Bank of India or the Government of India, the notice said. The issuance of public notice is part of the government's larger efforts to create awareness among the people from
getting cheated by fraudulent investment activities.
In December last, Corporate Affairs Minister Sachin Pilothad said that the government and regulatory agencies have put in place a stronger mechanism to address the menace of illegal investment schemes.
A better collaborative strategy has been put in place among various departments to remove the regulatory lacunae exploited earlier by fraudsters, he had said.
On various steps taken since the Saradha scam came to light in April this year, the Minister had said, there was much more greater awareness among law enforcement agencies.