NEW DELHI :
The Union cabinet on Wednesday approved the Banning of Unregulated Deposit Schemes Bill, 2019, which seeks to prevent unregulated entities from collecting deposits and duping the poor and the gullible of their hard earned savings.
The bill aims at plugging gaps in existing laws and giving powers to the government to prohibit companies from taking such funds from the public. People running such illicit deposit-taking schemes can face jail terms as well as stiff penalty if the bill becomes a law.
“The bill will help tackle the menace of illicit deposit-taking activities in the country, which at the present is exploiting regulatory gaps and the lack of strict administrative measures to dupe poor and gullible people of their hard-earned savings," the government said in a release.
It will replace the Banning of Unregulated Deposit Schemes Ordinance, 2019, and will be introduced in the ongoing Parliament session.
There are three different types of offences—running of unregulated deposit schemes, fraudulent default in regulated deposit schemes, and wrongful inducement—in case of unregulated deposit schemes, according to the bill. The proposed law provides for appointment senior government officials or a ‘competent authority’ that can attach assets or properties and subsequently realize the assets towards repaying depositors, the government said earlier this year. There will also be a provision for creating an online central database to collect and share information on deposit-taking activities in the country.
The proposed law has provisions of punishment as well as repayment of deposits if such schemes raise deposits illegally, the release said. For instance, accepting unregulated deposits will be punishable and can also lead to imprisonment, along with fines ranging between ₹3 lakh and ₹5 lakh. Repeat offenders could face imprisonment between 5 and 10 years, along with a fine amounting to ₹5-10 crore.
In the 2017-18 budget, former finance minister Arun Jaitley had announced a draft bill to curtail the menace of illicit deposit schemes to protect poor and gullible investors from dubious schemes.