SEBI passed a final order against Growpital and 30 linked entities for operating an unregistered Collective Investment Scheme and defrauding investors through pooled funds.
Growpital Unregistered CIS Scheme Banned by SEBI
The Securities and Exchange Board of India (SEBI) has issued a final enforcement order against the Growpital investment platform and 30 associated entities for operating an unregistered Collective Investment Scheme (CIS) in violation of Section 11 of the SEBI Act, 1992. The regulator found that funds were pooled from investors without registration or disclosures, and returns were generated through speculative investments and recruitment-based models.
SEBI's investigation revealed that Growpital collected over ₹90 crore from thousands of investors, promising high returns through agriculture and real estate projects, but with no credible business model. The structure resembled a pyramid scheme, with payouts to early investors funded by new entrants. The platform also failed to maintain investor funds in trust, leading to significant losses upon collapse.
The order bans the entities from accessing capital markets and appointing key personnel, and initiates asset attachment proceedings. This action reinforces SEBI’s aggressive stance against digital platforms misusing investor funds under the guise of innovation. Practitioners should advise clients that any pooling of funds without CIS registration constitutes a serious securities law violation with severe regulatory and potential criminal consequences.
