Do not get lured by companies offering
abnormal high returns or returns in a short span of time. Make sure that you invest your hard earned
money with entities who are registered / licensed / authorized by RBI, SEBI, NHB, State
Chit Funds are
schemes in which a person joins a group of people to contribute at regular
intervals to a common pool of funds. The
members will get the money, as per need, on rotation basis from that common
pool. Chit Funds should be registered with the State Government.
A Non-Banking Financial Company (NBFC) is
a company registered under the Companies Act, 1956 engaged in the business of
loans and advances, acquisition of shares/stocks/bonds/debentures/securities
issued by Government or local authority or other marketable securities of a
like nature, leasing, hire-purchase, insurance business, chit business but does
not include any institution whose principal business is that of agriculture
activity, industrial activity, purchase or sale of any goods (other than
securities) or providing any services and sale/purchase/construction of
immovable property. Before investing in a NBFC, always check if the NBFC registered with RBI
and if the registered NBFC authorized to accept deposits? Only a few
NBFCs are authorized by RBI to accept deposits.
Check the list at www.rbi.org.in/permittednbfcs Remember,
RBI has stipulated that only maximum 14% interest could be given by NBFCs. However, RBI neither insures nor guarantees repayment of deposits with NBFCs.
/ Ponzi schemes
/ Ponzi schemes are schemes that require you to join either by making initial
deposit or buying / agreeing to buy a product / item and then enroll more
members. The returns are directly linked
to and derived out of enrolling more members.
These are illegal and banned. Do
not get lured by such schemes which promise to give you high returns without
much investment in a short span of time.
Beware of the
person / entities offering to provide/arrange loans at very low rate of
interest, much lower than the ones offered by any Commercial Bank. They vanish after collecting processing
Invest in Companies and in Banks where you
are sure of getting repayment.
and Post Offices are secure places for
your investments, even if rates of interest offered by Banks and Post Offices
are less as compared to high returns offered by dubious entities.
Beware of newly
Beware that in
case of chit subscription, even if one person in a group defaults, all others
are at risk.
Do not renew the deposit automatically on
the maturity date. Get back the maturity proceeds and reinvest after going
through the financial position of the company.
Do not deposit in unincorporated bodies
because they are prohibited from taking money from public other than specified
Do not subscribe
for any scheme if the company has been declined registration by SEBI.