The Rajya Sabha has passed the Banning of
Unregulated Deposit Schemes Bill, 2019. It seeks to 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 Schemes.
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 severe punishment ranging
from 1 year to 10 years and pecuniary fines ranging from Rs 2 lakh to Rs 50
crore to act as deterrent.
The bill also provides for attachment of
properties or assets and subsequent realisation of assets for repayment to
depositors. Clear-cut timelines have been provided for attachment of property
and restitution to depositors.
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.