The Union Cabinet, chaired by the Prime Minister Narendra Modi, has given its approval to move official amendments to the Banning of Unregulated Deposit Schemes Bill, 2018, pursuant to the recommendations of the Standing Committee on Finance (SCF). The Banning of Unregulated Deposit Schemes Bill, 2018 was introduced in Parliament on 18th July, 2018 and was referred to the SCF, which submitted its Seventieth Report on the said Bill to Parliament on 3rd January, 2019. The official amendments will further strengthen the Bill in its objective to effectively tackle the menace of illicit deposit taking activities in the country, and prevent such schemes from duping poor and gullible people of their hard earned savings.
The Finance Minister in the Budget Speech 2016-17 had announced that a comprehensive Central legislation would be brought in to deal with the menace of illicit deposit taking schemes, as in the recent past, there have been rising instances of people in various parts of the country being defrauded by illicit deposit taking schemes. The worst victims of these schemes are the poor and the financially illiterate, and the operations of such schemes are often spread over many States. As per information provided by RBI, during the period between July, 2014 and May, 2018, 978 cases of unauthorized schemes were discussed in State Level Coordination Committee (SLCC) meetings in various States/UTs and were given to the respective regulators/law enforcement agencies in the states. A large number of such instances have been reported from the eastern part of the country. Subsequently, the Finance Minister in the Budget Speech 2017-18 had announced that the draft bill to curtail the menace of illicit deposit schemes had been placed in the public domain and would be introduced shortly after its finalisation.
The Banning of Unregulated Deposit Schemes Bill, 2018, which was introduced in Parliament on 18th July, 2018 provides a comprehensive legislation to deal with the menace of illicit deposit schemes in the country through, (a) complete prohibition of unregulated deposit taking activity; (b) deterrent punishment for promoting or operating an unregulated deposit taking scheme; (c) stringent punishment for fraudulent default in repayment to depositors; (d) designation of a Competent Authority by the State Government to ensure repayment of deposits in the event of default by a deposit taking establishment; (e) powers and functions of the competent authority including the power to attach assets of a defaulting establishment; (f) Designation of Courts to oversee repayment of depositors and to try offences under the Act; and (g) listing of Regulated Deposit Schemes in the Bill, with a clause enabling the Central Government to expand or prune the list.