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SEBI raises concerns over collective investment schemes

More than Rs. 100 billion has been raised by running CIS but these companies are refusing to be under any sort of regulation

April 04, 2013 10:01 IST | India Infoline News Service
Market regulator SEBI (Securities and Exchange Board of India) has raised concerns over the rapid development of grey market investment schemes which has collected crores of rupees through illegal means.

SEBI chairman UK Sinha said that the government should come out with a single regulator to tackle the issue of illegitimate money raised through collective investment schemes (CIS) in the country.

In 1999, after the CIS regulations were notified, all organisations running these schemes were required to register with SEBI. However, there were certain exceptions granted to Nidhi schemes, chit funds and co-operatives. Besides, in many areas the state governments also have rights and jurisdictions. However, people started taking advantage of these well-thought out, well-intentioned exceptions, the SEBI chairman said.

Mr Sinha was speaking at a seminar on investment outlook for 2013 organised by the Indian Merchants Chamber in Mumbai.

According to SEBI chairman, more than Rs. 100 billion has been raised by running CIS but these companies are refusing to be under any sort of regulation. Schemes such as Emu farming, goat farming, etc are ridiculous schemes and the regulator has taken note of it.

SEBI has been writing to the state governments and has been fighting court cases, Mr Sinha added. 
 
The regulator has asked for more powers from the government to enforce monetary penalty. "Even when we pass an order and impose monetary penalty, the capacity to recover the penalty is limited as we have to follow a long process. So we have recommended that Sebi should have powers similar to those given to CCI or I-T," he said.


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