Banning of Unregulated Deposit Schemes Bill, 2018

Are you the ONE who don't like to take chances and waste one precious year by failing in Prelims?

Do you want to test your knowledge after reading a particular topic? Then The MCQ Factory (TMF) is for you! It provides topic wise high quality MCQs for testing your knowledge in a particular topic. More details here

Features of the Bill

The salient features of the bill are:

  • The Bill bans Deposit Takers from promoting, operating, issuing advertisements or accepting deposits in any Unregulated Deposit Scheme.
  • The Bill ban unregulated deposit-taking activities altogether, by making them an offence. The existing legislative-cum-regulatory framework only comes into effect ex-post with considerable time lags;
  • The Bill creates three different types of offences, namely, running of Unregulated Deposit Schemes, fraudulent default in Regulated Deposit Schemes, and wrongful inducement in relation to Unregulated Deposit Schemes.
  • The Bill provides for severe punishment and heavy pecuniary fines to act as a deterrent.
  • The Bill provides for repayment of deposits in cases where such schemes nonetheless manage to raise deposits illegally.
  • The Bill provides for attachment of properties/assets by the Competent Authority, and subsequent realization of assets for repayment to depositors.
  • Timelines have been provided for attachment of property and restitution to depositors.
  • The Bill enables the creation of an online central database, for collection and sharing of information on deposit-taking activities in the country;
  • The Bill also defines “Deposit Taker” and “Deposit” comprehensively.

Definition of “Deposit Taker” and “Deposit” under the Bill

  • Deposit Takers include all possible entities (including individuals) receiving or soliciting deposits, except specific entities such as those incorporated by legislation;
  • Deposit is defined in such a manner that deposit-takers are restricted from camouflaging public deposits as receipts, and at the same time, not to curb or hinder acceptance of money by an establishment in the ordinary course of its business.