Cabinet Approves Ordinance Against Illicit Deposit Schemes In Country; Strict Penalties For Scamsters

The Union Cabinet chaired by Prime Minister Narendra Modi on Tuesday (19 February) cleared the promulgation of an ordinance that bans unregulated deposit schemes in the country, reports Business Standard (BS).

The ordinance was necessitated as the Banning of Unregulated Deposit Schemes Bill (Amendment), 2018 could not be taken up by the Rajya Sabha though passed by Lok Sabha. Every bill requires the assent of both houses as well of the President of India to become law.

The bill stipulates that any deposit-taking taking scheme by a private/public entity will be considered unregulated and thereby illegal if it is not registered with concerned regulators like Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), state or union territory governments etc.

The bill identifies three different types of offences — running of unregulated deposit schemes, fraudulent default in regulated deposit schemes, and wrongful inducement towards unregulated deposit schemes.

Monetary penalties of upto Rs 50 crore and a jail term of up to 10 years have been prescribed for frauds under the bill.

Frauds Highest In Eastern India

According to Reserve Bank of India (RBI) data, between July, 2014 and May 2018, as many as 978 cases of unauthorised deposit schemes were discussed in State Level Coordination Committee (SLCC) meetings held in various States/UTs.

It was also found that a large number of such illicit schemes were being operated in the eastern part of the country.

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