Collective Investment Scheme (“ CIS ”)- An investment scheme wherein several individuals come together to pool their money for investing in a particular asset(s) and for sharing the returns arising from that investment as per the agreement reached between them prior to pooling in the money. Many companies especially in semi-urban and rural areas are accepting deposits in their firm’s name and also promising two to three times returns in two to four years without taking any legal permissions. These ponzi schemes are running on the false promise of doling out high returns to the gullible investors. Ponzi scheme may be treated as either a chit fund or a collective investment scheme. But then a further complication arises who will regulate a ponzi scheme???? Collective investment scheme as a subject for monitoring came under the SEBI ambit after amendment to the SEBI Act, however there are several exemptions for schemes such as chit funds, nidhi funds, co-operatives, NBFCS. They are ex...
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