The action by the Securities and Exchange Board of India (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 un 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.