MUMBAI: The Reserve Bank of India ( RBI ) Governor Raghuram Rajan raised a red flag on the so called crowd-funding new ventures, which is slowly catching up in India amid a rush to find the next Alibaba or a Facebook which has led to investors throwing caution to winds.The style of funding is associated with the normal human tendency where when the gains are attractive, investors are happy, but blame lax regulations when the bets turn sour.“One of my worries about crowdfunding is when it works, it’s good, but when you have to recover (the important questions are) who recovers and how does it happen, especially in an environment where enforcement is difficult,” Rajan told the audience at the State Bank of India Banking and Economics Conclave here.Crowd-funding is defined by Sebi as the gathering of funds from multiple investors through a webbased platform for a specific creative project or business venture or for some social cause.However, the regulators are worried about the process in which crowd-funding is conducted. In case of investments from venture capitalists (VCs) and private equity (PE), it remains protected because of their influence on the company’s management and board, but that kind of protection is absent in crowd-funding where retail investors participate.In case of defaults or frauds, retail investors have no protection because of lack of documentation. If the website through which funds are raised closes down suddenly, then there is no way the money can be recovered. Some common crowd-funding platforms in India are TheHot-Start.com, Indiegogo.com and wishberry.in.