The Reserve Bank on Monday cautioned people against money schemes offering assured high returns and asked them not to have deposits with unauthorised non-banking finance companies (NBFCs), which falsely claim to have approval from the central bank to conduct business. It said all complaints on unauthorised acceptance and running of money circulation schemes should be referred to the Economic Offences Wing of the concerned state governments.
“It was reported that some individuals, firms, unincorporated association of individuals (unincorporated bodies) or marketing companies and companies engaged in money circulation schemes have been collecting money from the public by making tall promises of high returns, either through issue of advertisements or by sale of products,” the RBI said. It said in a statement that many such entities have vanished without repaying the money collected by them.Online GST Certification Course by TaxGuru & MSME- Click here to Join
“Money circulation schemes are banned under the Prize Chit and Money Circulation Schemes (Banning) Act 1978 and the respective state governments have the power to take action against the persons involved in such schemes,” RBI said.
The central bank has already published a list of over 300 non-banking finance companies (NBFCs) across the country which can accept deposits.
“No NBFC outside of this list can accept deposits from public. Doing so is clearly fraudulent and has to be investigated by the law enforcement agencies in the normal course,” the RBI said.
It has been issuing advertisement from time to time cautioning the public about such fraudulent practices, it added. NBFCs are also in the same operations as banks, although with some differences. Unlike banks, NBFCs cannot accept demand deposits or issue cheques.