The government has passed the Banning of
Unregulated Deposit Schemes Bill, 2018. The bill was has been passed after
amendments based on the recommendations of Standing Committee on Finance (SCF).
The bill comes in the backdrop of menace of illicit deposit schemes duping
general public over last few years in India.
The bill aims to effectively tackle the problem of
illicit deposit taking activities in India and protect the interests of
According to the bill, a scheme is unregulated if
it is not registered with the regulators listed in the Bill. There are several regulators;
For example: a) Reserve Bank of India (RBI) regulates deposits accepted by
non-banking financial companies, b) Securities and Exchange Board of India
(SEBI) regulates collective Investment Schemes, c) Ministry of Corporate
Affairs regulate deposit taking activities by companies other than NBFCs and d)
state and union territory governments regulate chit funds and money Circulation
The bill creates three different types of
offences- a) running of unregulated deposit schemes, b) fraudulent default in
regulated deposit schemes, and c) wrongful inducement in relation to
unregulated deposit schemes.
The Bill provides for complete prohibition on promoting,
operating, issuing advertisements or accepting deposits in any Unregulated
Deposit Scheme. It bans the unregulated deposit-taking activities by
making the offence ex-ante i.e. based on assumption and prediction.
It also provides for a Competent Authority by
the State Government to ensure repayment of deposits in the event of default by
a deposit taking establishment