PROJECT SYNOPSIS

INTRODUCTION
A Collective investment scheme is any arrangement where money is pooled by different
investors. The objective to invest in such schemes is to receive profits, income, and property.A
CIS, is one of the most attractive investment option available to the retail and small investors
especially in the Indian market. Given the financial stabiltiy and credit worthiness of the small
investors many are prohibited to take the larger steps, the CIS provides them with a viable and
fruitful option to increase wealth and provide financial security. CIS helps in diversification of
the investment and at the same time balances out the risks associated with different securities.
The large pool of fund is utilised and invested in different securities which gives a good return
over a period of time.

STATEMENT OF PROBLEM & HYPOTHESIS:

A Collective investment scheme is any scheme or arrangement, which satisfies the conditions,
referred to in sub-section (2) of section 11AA of the SEBI Act. Any scheme or arrangement
made or offered by any company under which the contributions, or payments made by the
investors, are pooled and utilised with a view to receive profits, income, produce or property, and
is managed on behalf of the investors is a CIS. Investors do not have day to day control over the
management and operation of such scheme or arrangement. However there has been tremendous
market development in the schemes and it is important to assess the faults in such schemes and
regulate them so as to control the infiltration of ponzi schemes that are continuously rising. Also
the SEBI has been proved inefficient to deal with the implementation and administration of these
schemes.

AIMS AND OBJECTIVES:

1. To understand the meaning and role of Collective Investment Schemes.
2. To understand the current changes in the Indian Market.
3. To trace the market development in the various CIS schemes.
4. To assess the regulation in CIS put up by government to restrain infiltration of ponzi schemes.

REVIEW OF LITERATURE:
1. Collective investment schemes
Until a few years ago, everybody felt that every entity that could possibly raise money from
retail investors was covered by the elaborate regulatory framework of one of the financial market
regulators — SEBI, RBI, IRDA or PFRDA. But in recent years, it has become clear that dozens
of such schemes have been flourishing outside the ambit of regulators. And though they all claim
to be legitimate, hardly any of them has sought registration with SEBI as CIS, despite it being a
legal necessity.The sums they’ve been raising are not to be scoffed at either. PACL’s scheme for
investing in plots of land, for example, collected 49,100 crore from 5.85 crore investors over two
decades. The strategy used by such unregistered collective investment schemes is simple.1
2. Market Development in CIS.
Events like the Lehman Brothers and MF Global insolvencies or the Madoff fraud have focused
attention on CIS asset protection regimes. In particular, in Europe the Madoff fraud brought the
issues of the custodian's liability and potential conflict of interests to the fore, and showed the
risks associated with the use of local sub-custodians when those default or fail to perform their
duties appropriately. These events have been a significant political driver in financial services
regulation, especially in the European Union (EU).2

RESEARCH METHODOLOGY:
The topic for the research study and the nature of the topic is theoretical and descriptive. In the
research and theoretical articles, effective use of secondary analysis of published results has been
made. Secondary data has been used as a part of research. Paper-based sources like books,
journals, periodicals, abstracts, research reports, conference papers, internal records, newspapers
and magazines were used. Choosing the secondary source over the period of research included
analysis and determination of relevance. Quantitative analysis has been done along with a case
study.

REFERENCES:
● FR02/12 Principles on Suspensions of Redemptions in Collective Investment Schemes, Final
Report, Report of the Technical Committee of IOSCO, 19 January 2012, available at
http://www.iosco.org/library/pubdocs/pdf/IOSCOPD367.pdf. and Principles of Liquidity Risk
Management in Collective Investment Schemes (work in progress)
● Manupatra.com
● ICSI Module 1
● www.iosco.org

1
https://www.thehindubusinessline.com/opinion/columns/aarati-krishnan/collective-investment-
schemes-allyou-wanted-to-know-about/article7698990.ece.
2
FR25/2015, Final Report, Iosco.org