Lok Sabha passes Bill to tackle illicit deposit schemes

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  1. The Lok Sabha has passed the Banning of Unregulated Deposit Scheme Bill, 2019.
  2. The bill provides for a comprehensive mechanism to ban unregulated deposit schemes and to protect the interests of depositors.
  3. The bill has amended three legislations namely (a)Reserve Bank of India Act,1934 (b)Securities and Exchange Board of India Act,1992 and (c)Multi-State Co-operative Societies Act,2002.
  4. The bill defines regulated deposits as all deposit-taking schemes which are overseen and regulated by regulators like (a)Reserve Bank of India (RBI) (b)Securities and Exchange Board of India (SEBI) (c)Ministry of Corporate Affairs and (d)state and union territory governments.
  5. On the other hand,deposit-taking scheme is defined as unregulated if it is not registered with the regulators listed in the Bill.
  6. The bill completely bans the promoting,operating,issuing advertisements or accepting deposits in any Unregulated Deposit Scheme.
  7. The Bill define three 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.
  8. The bill also provides for severe punishment and heavy fines to act as a deterrent.It also has a provision for repayment of deposits in cases where such schemes manage to raise deposits illegally.
  9. Further,the bill provides clear cut timelines for attachment of property and reimbursement to depositors.It also provides for designation of Courts to oversee repayment of depositors and to try offenses under the bill.
  10. The bill also provides for the creation of an online central database for collection and sharing of information on deposit-taking activities in the country.