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Securities and Exchange Board of India (Sebi) will continue to take legal actions against companies taking deposits from the public promising to return double the money in three to four years.
The stock market regulator will also start a public awareness campaign to discourage retail investors from subscribing to the schemes of these companies.
"For a variety of reasons investors are choosing to get into investment schemes, which according to our understanding and I will not name any companies, are not legal. We find that people are raising money by promising the investors that the money will be doubled in three to four years. At the same time they are giving commissions to agents in the range of 15-25%," UK Sinha, chairman of Sebi, said at a seminar organised by the Confederation of India Industry (CII) here today.
"I don't claim to be an expert in finance, but I cannot think of any legitimate business activity where one can provide this sort of return. Obviously a time will come when investors will start losing their money. While we are fighting this on the legal side, we are also going to launch a campaign," he added.
Sebi has also requested the government to formulate a new set of rules and appoint a regulator for these companies. Sinha claimed that Sebi has won a few legal battles against these companies in recent months.
"We have been taking action against those companies. But obviously everybody has the right to go to the court to articulate their point of view. We had a series of successes in the judiciary in the last one or two months. But this is a matter in which awareness is also required," he said.
