The Banning of Unregulated Deposit Schemes Bill, 2019: Highlights

The Banning of Unregulated Deposit Schemes Bill, 2019 was introduced by Minister of Finance, Ms. Nirmala Sitharaman in the Lok Sabha in July 2019. The Bill aims to resolve the problem of illicit deposit takings in India. It has replaces the Banning of Unregulated Deposit Schemes Ordinance, 2019. The term ‘deposit’ has been defined as an amount of money received by way of an advance or loan or in any other form, by any deposit taker with a promise to return. A deposited making scheme will be considered unregulated if it is taken for a business purpose and is not registered with the regulators listed in the Bill.

The Bill discusses three offences namely running of unregulated deposit schemes, fraudulent default in regulated deposit schemes, and wrongful inducement in case of unregulated deposit schemes. The Bill further discuss the role of a Competent Authority which may perform the functions including provisionally attach the property of the deposit taker, as well as all deposits received, summon and examine any person it considers necessary for the purpose of obtaining evidence, and order the production of records and evidence. A government, not below the rank of a secretary to the state or central government will be appointed as the Competent Authority which will have the power equivalent to that of a civil court. However, the Bill provides for constitution of courts for certain areas. Such courts regarded as designated courts will have the power to determine the list of depositors and their respective dues, direct the Competent Authority to sell the property and equitably distribute the money realised among the depositor etc. The Bill also provides for the establishment of an online database in order to keep a record of the depositors.