SEBI orders PACL to return $8.1 billion raised from investment scheme

SEBI orders PACL to return $8.1 billion raised from investment scheme

The Securities and Exchange Board of India (SEBI), India's capital markets regulator, has ordered property developer PACL Ltd to return at least $8.1 billion raised from retail investors after finding the company had failed to register its land investment scheme.

The action by the 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 lumpsum, 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 an unlawful deposit scheme that went bust.


Collective investment

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.
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.

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