As regulator Securities and Exchange Board of India continues its clampdown on ponzi schemes, it has found Odisha to be a major hotbed for such illegal fund-raising activities with investors being duped in name of jatropha bushes and gold investments.
A large number of companies, either based out of this eastern state or having a significant presence there, are being probed for running illicit 'collective investment schemes', while penal action has already been initiated by Sebi against over 20 other entities from the region.
The prominent names that have faced Sebi action and might be slapped with further penalties or other enforcement measures include Sunshine and Green Ray groups.
While an order was passed in Sunshine group case earlier this year, the regulator is further probing the matter.
Among others, such companies are suspected to have collectively garnered thousands of crores worth rupees from investors with promises of huge returns, including doubling of money in a few years, from investments in jatropha plants, real estate ventures, hospitality business, gold and silver coins and a host of agriculture-related activities.
According to senior officials, Odisha has emerged as a major hotbed for such illicit fund-raising activities on the lines of its neighbouring state West Bengal.
Besides, a number of entities operating from West Bengal, including Saradha group, have also significant presence in Odisha. Sebi is the only regulatory agency to have passed directions so far in many such cases, including Saradha, although investigations are underway by other agencies too.
Sebi has ordered refund of money and debarment from such fund-raising activities in these cases.
Besides, it has written to the state governments and others for further criminal proceedings against operators of such schemes, while further such actions are expected in some other cases.
In the past, the illegal fund-raising activities in Odisha were mainly related to agriculture-related businesses, but cases like jatropha bushes, gold and silver coins and real estate schemes have also come to the fore in the recent past.
In one of the schemes linked to jatropha plants, funds were collected from about 40,000 gullible investors with promise of tripling of money in seven years.
Jatropha, a wild green shrub largely found in arid and hot regions like Egypt, India and Madagascar, gained economic significance in 2007 when global investment banking major Goldman Sachs predicted that jatropha can be one of the best candidates for future bio-diesel production.
Over the years, many governments across the world also launched special programmes for jatropha plantations and mandatory blending for biofuel production, but the results were later found to be far from encouraging.
Taking benefit of the hype around biofuel connection of jatropha plants, some operators launched their own schemes to collect money from gullible investors.
Those against whom Sebi has taken action in the past in Odisha include Abhinav Agrotech, Ak-Lovya Plantatons, Auroshree Agro Industries, Bethel Green Growth, Bikash India Agro Estates, Chotanagpur Herbal Agro, Green Estates, Green Garden Plantations, Greenedge Plantations, Jiban Bikash Plantations, Lifecare, Surakshya Green Gold, Tans Oceanic Agrotech, Mahanadi Plantations, Maruti Greeneries, Natural Plantations and Ruran Agro Plantations.
As illicit money-pooling schemes sprout across nooks and corners of the country, Sebi has asked state governments to put in place the first line of defence against such activities and provide 'early warning systems' for cases requiring action by the capital markets regulator.
Promising full support to the states in fighting this menace where fraudsters have collected thousands of crores of rupee through various ponzi and other illegal schemes, Sebi Chairman U K Sinha recently told PTI that the state governments have immense powers, if utilised well, to bring to book such entities.
Sebi has also urged all states to pass the State Deposit Protection Act, which would allow the state governments to take stern action against illegal deposit-taking activities within their jurisdictions.
While many states have passed this Act already, at least seven others are yet to do so.
Under a new law, Sebi has been authorised to take action against all unregulated money-pooling schemes with a corpus of Rs 100 crore (Rs 1 billion) or more.
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