SEBI to Directly Refund Over 5,000 Growpital Investors With 12% Annual Interest

In an unprecedented enforcement measure aimed at safeguarding retail investors, the Securities and Exchange Board of India (SEBI) has stepped in to directly handle and distribute refunds to victims of the fraudulent agricultural investment platform Growpital.

The market regulator has ordered the winding up of the unregistered collective investment scheme (CIS) that mobilised Rs 192.88 crore from 5,208 unique retail investors between 2020 and 2024. Under the final order passed by SEBI Whole-Time Member Kamlesh Chandra Varshney, investors will receive their outstanding dues along with 12% annual interest calculated from January 29, 2024, until the date of repayment.

A Direct Refund Mechanism

Unlike conventional recovery proceedings where regulatory authorities direct fraudulent promoters to carry out investor repayments—often resulting in protracted delays and evasion—SEBI is actively taking charge of the restitution process in this case.

Key facets of SEBI's refund process include:

• SEBI-Controlled Account: Around Rs 50 crore already attached and held in escrow accounts, including funds with payment gateway Cashfree Payments India Pvt Ltd, will be moved to an interest-bearing SEBI account for the initial distribution phase.
• Verification and Direct Transfers: The regulator will directly verify investor transaction databases with Cashfree Payments to ensure funds are credited proportionately and directly to authentic investors.
• Nodal Officer Oversight: A designated Nodal Refund Officer will oversee the verification and transfer procedures to maintain complete administrative transparency.
• Shortfall Recovery: Any deficit in repaying the total principal and accrued interest will be recovered by attaching and liquidating the receivables and personal assets of the primary promoters.

The Modus Operandi of the Farmland Scam

Growpital lured retail investors with ticket sizes as low as Rs 5,000, promising assured, tax-free annual returns ranging from 10% to 18.5% through participation in agricultural projects.

To circumvent securities laws, the platform onboarded investors as limited partners into three limited liability partnerships: ZF Project 1 LLP, ZF Project 2 LLP, and ZF Project 3 LLP. The promoters claimed these partnerships owned and operated lucrative agricultural operations, such as high-value cumin (jeera) seed farming in Rajasthan.

However, SEBI's forensic probe uncovered that the LLP partners held no operational control or ownership of the underlying land. Farmland agreements were instead held in the name of Yotta Agro Venture Pvt Ltd and its subsidiaries. Furthermore, approximately Rs 95.60 crore was systematically routed through supplier and revenue entities without genuine underlying commercial transactions, functioning essentially as a fund diversion conduit.

Penalties and Market Bans

Holding all 28 noticees guilty under the SEBI Act and Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations, the regulator slapped a cumulative penalty of Rs 25.10 crore on the entities.

The eight primary noticees—including key promoters Rituraj Sharma, Krishnna Joshi, Gayatri Rinwa, Yotta Agro Venture, Farm Silo Tech LLP, and the three ZF Project LLPs—have been barred from accessing the securities market for five years or until the entire refund process is completed, whichever is later. The remaining 20 noticees, found guilty of aiding and abetting the operation, face a three-year market ban.

This enforcement action underscores SEBI’s heightened vigilance against unregulated fintech platforms operating pseudo-partnership models to draw retail savings into unregistered pooling schemes.

Tags: SEBI Growpital Yotta Agro Venture Alternative Investments Collective Investment Schemes