Consumer Alerts

Last modified at 03/06/2016 13:14 by System Account

Consumer Alerts​

Unregistered entities
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 Government, etc.

Chit Funds
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. 

Non-Banking Financial Company
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.

Pyramid Structures / Ponzi schemes
Pyramid Structures / 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.

Low processing charges
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 charges.

Other Do’s
Invest in Companies and in Banks where you are sure of getting repayment.

Nationalized Banks 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 incorporated companies.

Beware that in case of chit subscription, even if one person in a group defaults, all others are at risk.

Other Don’ts 
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 relatives.

Do not subscribe for any scheme if the company has been declined registration by SEBI.


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