Union Cab approves introduction of Bill to ban unregulated deposit schemes

Speed Post News Network

New Delhi : In a major policy initiative to protect the savings of the investors, the Union Cabinet chaired by PM Narendra Modi has given its approval to introduction of  ‘Banning of Unregulated Deposit Schemes Bill, 2018,’ and ‘Chit Funds (Amendment) Bill, 2018,’ in  Parliament.

Banning of Unregulated Deposit Schemes Bill, 2018, is aimed at tackling the menace of illicit deposit taking activities in the country. Companies/ institutions running such schemes exploit existing regulatory gaps and lack of strict administrative measures to dupe poor and gullible people of their hard-earned savings.

The Bill will provide a comprehensive legislation to deal with the menace of illicit deposit schemes in the country through complete prohibition of unregulated deposit taking activity and deterrent punishment for promoting or operating an unregulated deposit taking scheme.

The Bill contains a substantive banning clause which bans deposit takers from promoting, operating, issuing advertisements or accepting deposits in any Unregulated Deposit Scheme. The principle is that the Bill would ban unregulated deposit taking activities altogether, by making them an offence ex-ante, rather than the existing legislative-cum-regulatory framework which only comes into effect ex-post with considerable time lags. 

Chit Funds (Amendment) Bill, 2018, will facilitate orderly growth of the Chit Funds sector and remove bottlenecks being faced by the Chit Funds industry thereby enabling greater financial access of people to other financial products, according to a PIB release.