There are many such co-operative societies, credit and thrift societies, chit funds, financial companies, and other various companies in our country which promise to give good interest to its members or investors on their deposits with it. They may be using this money in construction or business areas and then earning money and out of that giving the interest to the investors. It is quite possible and many investors would vouch for that. But my experience and knowledge about all these companies is not in a positive territory and I would suggest not to fall in trap of these companies which are registered legal companies in our countries but adopting wrong practices to cheat the investors. This company might be an exception and might not be cheating but how to find out that. Every year hundreds of such companies are declared illegal by the registrar of companies in India but then they again mushroom under newer names and newer disguise and start their agenda.
In past also, we had seen thousands of companies which raised money from the gullible investors but then they could not give it back and most of them either disappeared from the scene or became bankrupt and investor had no way to get his investment back. In 1990 to 2000 there was a mushrooming of these companies and investors lost heavily. I was in Chennai at that time and people were investing in those companies much as they were giving high interest and gift also when you opened a new account there. I still remember the name of some of those companies like Lloyds Finance, Pentafour Software, DCM Financials, Madhusudan Chits, Pentafour Products, NEPC Micon, Bajaj Financials and Investment, Sterling tree plantation etc. These are only the main and prominent names and there were thousands of others which took so much money from the investors and practically the investors were duped. Govt made a high level body under SEBI comprising of retired judges to liquidate the immovable property (like office building or land plot) of some of these companies to make refund of some part of investors but that worked only in a very few cases as in the most of the cases there was no property traceable. Even those cases where property was auctioned only a few investors got only about 20% return of their investments.
Today there is no agency where the affected investor can go and plead for help in this matter. So considering all these aspects it is better to be cautious in the matter and not to invest in such apparently lucrative areas.
Knowledge is power.