The government of India is scrambling to draw up new legislation on investment schemes that target the poor.
Millions of depositors, most from the lowest-income brackets, are now destitute and in debt, following the collapse of several funds, which were unregulated.
The Securities and Exchange board of India says people have handed over $2bn to these so-called collective investment schemes.
With no solution in sight, the state government and regulators are now passing the buck, blaming each other for allowing the money-circulating schemes to flourish.
Al Jazeera's Divya Gopalan reports from Kolkata.