The Union Cabinet has approved the official amendments to an Act that classifies any deposit scheme not registered with the government as an offence and bans it.
The amendments will further strengthen the Bill in its objective to effectively tackle the menace of illicit deposit-taking activities, and prevent such schemes from duping poor and gullible people of their hard-earned savings. 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 that only comes into effect ex-post with considerable time lags.
Among the provisions is one that bans deposit takers from promoting, operating, issuing advertisements or accepting deposits in any unregulated scheme.
The Bill creates three different types of offences: (i) running of unregulated deposit schemes, (ii) fraudulent default in regulated deposit schemes, and (iii) wrongful inducement in relation to unregulated deposit schemes.
According to the Bill, it provides for severe punishment and heavy pecuniary fines to act as a deterrent.
Law Minister Ravi Shankar Prasad says penalties can involve jail term as well as the sale of the offenders’ assets to pay back the defrauded party within set timelines.
The Banning of Unregulated Deposit Schemes Bill 2018 was introduced in Parliament on July 18, 2018 and was referred to the standing committee, which submitted its seventieth report on the Bill to Parliament on January 3, 2019.
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