Be alert against deposit schemes offering high returns: Govt

Written by PTI | New Delhi | Updated: Jan 26 2014, 23:52pm hrs
Ponzi schemesThe government has cautioned the general public not to be lured by deposit schemes. Reuters
Continuing its fight against fraudulent investment schemes, the government has cautioned the general public not to be lured by deposit schemes that promise high return on investments.

Asserting that "speculative activities and assured returns do not go together," the government has also advised people from falling for promises of high returns by entities running multi-level marketing and pyramid structured schemes.

Fraudulent investment schemes are also known as ponzi


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 Pilot

had 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.