In a bid to save credulous investors from ponzi schemes, the Central government has banned unregulated deposit schemes, a move that may help tackling the menace of illicit deposit-taking activities. Pursuant to Banning of Unregulated Deposit Schemes Ordinance, 2019 now any Individual or group of individuals cannot take any deposit or loan from any person other than relatives, whereas partnership firms can take deposit or loan from relatives or partners only.
Why This Regulation ?
Unregulated Deposit Scheme
Explanation-In my opinion
Regulated Deposit Schemes?
What are receipts which shall NOT be treated as Deposits ?
Following receipts shall not be treated as Deposits :
1. Loans received from Scheduled Bank / Cooperative Banks / other Banking Company;
2. Loan / financial assistance received from Public Financial Institutions / NBFC Companies registered with RBI / Regional Financial
Institutions / Insurance Companies;
3. Amount received from appropriate Government / Statutory Authorities constituted under Act of Parliament or State Legislature;
4. Amounts received from foreign Governments, foreign or international banks, multilateral financial institutions, foreign Government owned development financial institutions, foreign export credit collaborators, foreign bodies corporate, foreign citizens, foreign authorities or persons resident outside India subject to the provisions of the FEMA, 1999;
5. Capital contributions by partners of partnership firm or a LLP;
6. Loan received by individuals from their relatives or loans received by any partnership firm or LLP from the relatives of its partners;
7. Credit received by a buyer from a seller on sale of imoveable or immovable property
8.Amounts received by asset re-construction company registered with the RBI;
9.Any deposit made or amount accepted by political parties under the Representation of the People Act, 1951;
10. Payment received from the members of self help groups within the ceiling prescribed by State Government or Union Territory
11. Amount received in course of business, or for purpose of business and bearing a genuine connection to such business, including :
For the purpose of this ordinance means relatives as per Companies Act, 2013 and which are as follows
Banning of Unregulated Deposit Schemes
(a) the Unregulated Deposit Schemes shall be banned;
(b) no deposit taker shall, directly or indirectly, promote, operate, issue any advertisement soliciting participation or enrolment in or accept deposits in pursuance of an Unregulated Deposit Scheme.
Certain scheme to be Unregulated Deposit Scheme.
Fraudulent default in Regulated Deposit Schemes.
Wrongful inducement in relation to Unregulated Deposit Schemes.
INFORMATION ON DEPOSIT TAKERS
(1) The Central Government may designate an authority, whether existing or to be constituted, which shall create, maintain and operate an online database for information on deposit takers operating in India.
(2) The authority designated under sub-section (1) may require any Regulator or the Competent Authority to share such information on deposit takers, as may be prescribed.
OFFENCES AND PUNISHMENTS
(1) Any deposit taker who solicits deposits in contravention of section 3 shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to five years and with fine which shall not be less than two lakh rupees but which may extend to ten lakh rupees.
(2) Any deposit taker who accepts deposits in contravention of section 3 shall be punishable with imprisonment for a term which shall not be less than two years but which may extend to seven years and with fine which shall not be less than three lakh rupees but which may extend to ten lakh rupees.
(3) Any deposit taker who accepts deposits in contravention of section 3 and fraudulently defaults in repayment of such deposits or in rendering any specified service, shall be punishable with imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine which shall not be less than five lakh rupees but which may extend to twice the amount of aggregate funds collected from the subscribers, members or participants in the Unregulated Deposit Scheme.