And the day has come when the risk to remain tight in a BUDS has become more painful…….
Banning of Unregulated Deposit Scheme Ordinance, 2019 (BUDS) with effect from 21.02.2019
Menace of illicit deposit schemes cracked down
Meaning of Deposit
A deposit has been defined to mean:
An amount of money received by way of an advance or loan or in any other form,
By any deposit taker
Receiving or soliciting deposits but does not include
With a promise to return
whether after a specified period or otherwise,
either in cash or in kind or
in the form of a specified service
With or without any benefit in the form of interest, bonus, profit or in any other form.
Provided such abovementioned amounts will be deemed to be deposits from the expiry of 15 days from the date in which such amounts become refundable.
Provided further where the Deposit taker has not taken necessary requisite approval/permission, such amounts accepted shall be deemed to be deposits.
With effect from 21.02.2019, the Unregulated Deposits Schemes shall be banned.
INFORMATION ON DEPOSIT TAKERS
Every Deposit taker
> who accepts/ continues / solicits deposit as defined above
> every company who accepts deposits under Chapter V of The Companies Act, 2013
Shall intimate in such form and within such time to the competent authority as will be prescribed.
The Central Government will create a central database on the information of such deposit takers.
POWERS, DUTIES AND PENALTIES
Vast and exhaustive powers have been conferred on the Authorities including the powers of inquiry, inspection, call for information, search, seizure, summons, arrests and power to pass order for freezing of assets /accounts and heavy penalties have been imposed on the defaulting deposit takers.
REGULATED DEPOSIT SCHEMES
The following will be regarded as Regulated Deposit Schemes where such schemes are regulated by
4) State Government /Union Territory Government
5) National Housing Bank
6) Pension Fund Regulatory and Development Authority
7) Employees Provident Fund Organization
8) Central Registrar, Multi State Co-operative Society
– Amounts accepted from members / shareholders of a Co-operative society shall be deemed to be deposits if such members / shareholders are nominal/associate members by whatever name called who do not have full voting rights in the meetings of such co-operative society.
9) Ministry of Corporate Affairs
– Deposits accepted under Chapter V of The Companies Act, 2013
– Deposits accepted by Nidhi companies.
Every Ponzi scheme is followed by a new law and such reactive law-making adds to the woes of genuine entrepreneurs. The penal provisions under such law are equally scary. ‘Scheme’ means to make plans, especially in a devious way or with intent to do something illegal or wrong. The intention is to prohibit such persons from defrauding investors.
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