In a major policy initiative to protect the savings of the
investors, the Union Cabinet chaired by the Prime Minister Narendra Modi has
given its approval to introduce the following bills in the Parliament:-
(a)
Banning of Unregulated Deposit Schemes Bill, 2018 in parliament &
(b) Chit
Funds (Amendment) Bill, 2018
Details:
The Banning of Unregulated Deposit Schemes Bill, 2018 will
provide a comprehensive legislation to deal with the menace of illicit deposit
schemes in the country through,
a)
complete prohibition of unregulated deposit taking activity;
b)
deterrent punishment for promoting or operating an unregulated
deposit taking scheme;
c)
stringent punishment for fraudulent default in repayment to
depositors;
d)
designation of a Competent Authority by the State Government to
ensure repayment of deposits in the event of default by a deposit taking
establishment;
e)
powers and functions of the competent authority including the
power to attach assets of a defaulting establishment;
f)
designation of Courts to oversee repayment of depositors and to
try offences under the Act; and
g)
listing of Regulated Deposit Schemes in the Bill, with a clause
enabling the Central Government to expand or prune the list.
Salient Features:
The salient features of the Bill are as follows:
a)
The Bill contains a substantive banning clause which bans
Deposit Takers from promoting, operating, issuing advertisements or accepting
deposits in any Unregulated Deposit Scheme. The principle is that the Bill
would ban unregulated deposit taking activities altogether, by making them an
offence ex-ante, rather than the existing legislative-cum-regulatory framework
which only comes into effect ex-post with considerable time lags.
b)
The Bill creates three different types of offences, namely,
running of Unregulated Deposit Schemes, fraudulent default in Regulated Deposit
Schemes, and wrongful inducement in relation to Unregulated Deposit Schemes.
c)
The Bill provides for severe punishment and heavy pecuniary
fines to act as deterrent.
d)
The Bill has adequate provisions for disgorgement or repayment
of deposits in cases where such schemes nonetheless manage to raise deposits
illegally.
e)
The Bill provides for attachment of properties/ assets by the
Competent Authority, and subsequent realization of assets for repayment to
depositors.
f)
Clear-cut time
lines have been
provided for attachment of property and restitution to depositors.
g)
The Bill enables creation of an online central database, for
collection and sharing of information on deposit taking activities in the country.
h)
The Bill defines "Deposit Taker" and
"Deposit" comprehensively.
i)
"Deposit Takers" include all possible entities
(including individuals) receiving or soliciting deposits, except specific entities
such as those
incorporated by legislation.
j)
"Deposit" is defined in such a manner that deposit
takers are restricted from camouflaging public deposits as receipts, and at the
same time not to curb or hinder acceptance of money by an establishment in the
ordinary course of its business.
k)
Being a comprehensive Union law, the Bill adopts best practices
from State laws, while entrusting the primary responsibility of implementing
the provisions of the legislation to the State Governments.
Source: Govt of India Press Release
