However, a lack of clarity with regard to regulations for most of such schemes is making it difficult for the capital markets regulator to act against their operators, because of which Sebi is seeking help from other regulators and government departments, including RBI, on these cases.
Sebi may have to refer most of the gold-linked money pooling cases to RBI, which is entrusted with the regulation of 'Gold Deposit Schemes' offered by banks and registered Non Banking Finance Companies, a senior official said.
However, the problems are more acute with regard to 'gold bond schemes' being offered by entities who are neither banks nor NBFCs, and therefore not registered with RBI, he added.
For example, a number of jewellers and other entities involved in bullion business have launched various schemes allowing customers to pay instalments and take delivery of gold or get applicable returns at a later date.
While many schemes appear to be pure sale-purchase activities with money being paid linked to actual delivery of gold or jewellery worth equivalent amount, there are numerous cases involving issuance of certain bonds making them securities market transactions.
These schemes typically ask the investor to contribute instalments of as low as Rs 100-1,000 per month, while they are promised returns linked to gold price appreciation after expiry of one year or more.
The total quantum of money pooled by such schemes could not be quantified, as they are widely dispersed across the country and funds collected by many such operators are not reported to any single agency.
However, estimates suggest that there are at least 100 such schemes across the country that could have raised amounts higher than Rs 100 crore -- the threshold limit for any money pooling activity to possibly become a Collective Investment Scheme (CIS) if contributions made by investors are pooled and managed on their behalf to earn profits.
There could be some gold schemes with total deposits running into thousands of crores, although their exact size is difficult to be ascertained, another official said, adding that all such schemes may not be totally illegal as investor complaints have been received against certain registered 'Gold Deposit Schemes' as well.
Sebi has identified crackdown against fraudulent money circulation schemes as one of its priority areas and the capital markets watchdog is strengthening its coordination mechanism with other regulators like RBI, as also with the central and state governments, in this regard.
An effective information sharing mechanism is being established with other regulators and government agencies for dealing with cases of fraudulent deposit taking and fund raising activities, as also on unauthorised Collective Investment Schemes.
In past couple of years, Sebi has intensified crackdown on illicit CIS operations. It has come across entities promising huge returns from activities ranging from real estate, hospitality and agricultural land to innovative ideas like emu farming, goat rearing and ghee production.
Amid the increased regulatory surveillance, many operators have shifted their focus towards gold, which has traditionally been a favoured investment avenue for Indians.
This public affection for gold has also led to the government taking various measures to channelise household savings from gold to other financial assets.
As part of these efforts, the government and RBI last year made it more attractive for the consumers to keep their idle gold with the banks under Gold Deposit Schemes. Besides, mutual funds were also allowed to participate in these schemes.
Currently, there are two gold related schemes, namely, the Gold Exchange Traded Fund (Gold ETF) and the Gold Deposit Scheme, that are intended to channelise gold holdings into institutional channels.
The Gold ETF is provided by Sebi-regulated mutual funds, while the Gold Deposit Scheme is offered by a number of banks.
Under these schemes, banks accept gold deposited by their customers and the gold is on-lent by the banks to the gems and jewellery trade.
At the end of the deposit period, the depositor is entitled to a return of physical gold or its equivalent in cash at the current market price of gold.