The Union cabinet has approved the Banning of Unregulated Deposit Schemes Bill. The Bill which aims to tackle the menace of illicit deposit-taking activities in the country will replace the earlier promulgated Banning of Unregulated Deposit Schemes Ordinance, 2019.
Why?
The Union Cabinet aims to curb the menace of half-baked investment schemes and chit funds that are causing significant losses to the people.
What the bill aims to do?
- The Bill aims to tackle the growing challenge of illicit deposit-taking fraudulent activities in the country.
- These activities currently exploit the regulatory gaps and the extent lax administrative measures to fool the poor and gullible people into depositing their hard earned money with these schemes.
- The Bill seeks to define the deposit takers as an individual, a group of individuals, or a company who asks for (solicits), or receives deposits from the people.
- While banks and other entities incorporated under any other law, also seek deposits, they are not included as deposit takers.
- The Bill allows the central government to designate an authority which will create an online central database for information on deposit takers.
- These deposit takers will be required to inform the database authority about the nature of their business.
What happens after the bill?
The proposed bill will have significant provisions for punishing the culprits for running these illicit deposit schemes and have powers to ensure that the repayment is done from the deposits if the schemes attract any money.