One official said many schemes had operated for decades without oversight, until legal changes last year gave SEBI broader powers.
"A collective investment scheme in itself is not unlawful, but the way these schemes have been run, by and large as assured-return guarantee schemes, that's not allowed," he said.
"The law is clear; it requires them to come and register with us. But they don't, because they have operated without any oversight for years. Why will they want any supervision now?"
A SEBI spokesman had no immediate comment.
Collective investment schemes, often known locally as chit funds, operated in the regulatory gaps for years by getting licences from state authorities that were ill equipped to monitor them.
Last year, SEBI was mandated to oversee any investment vehicle that raises more than 1 billion rupees from the public.
Firms issuing any form of security to more than 49 investors are supposed to register with SEBI, but many flout the rules, and activists say even when caught and barred, companies can simply change their names and get back in the market.
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"The regulator is trying to do its best, given the capability and resources they have, but is it enough to meet the scale of the challenge? Maybe not," said Shriram Subramanian, managing director of corporate governance advisory firm InGovern.
For most investors, including those in PACL and Sahara, efforts to reclaim their investments are tangled in a legal process that could take years. The unlicensed companies often vanish, and others banned from the market can challenge the order in court for years.
Sahara says it has paid 95 percent of the dues to the bondholders, but the markets regulator disputes that.
In West Bengal, factory worker Makhan Midya saved 500 rupees from his salary of 6,000 rupees a month until eight months ago, investing in Rose Valley Real Estate and Constructions Ltd.
A SEBI probe showed Rose Valley raised billions of rupees without the required licence, and in June it asked the company to wind up its business and refund investors within three months of the order. Midya has yet to get a refund.
Tapan Biswas, Rose Valley operations manager in the state capital Kolkata, blamed SEBI, arguing the decision to freeze its bank accounts had hit business and its ability to repay.
The regulator in August last year gave unlisted PACL three months to refund $8.1 billion to investors, after ruling that the company's investment schemes had not been registered.
PACL, which did not respond to requests for comment, has appealed against the decision.