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Ponzi schemes, bills
News:
- The Banning of Unregulated Deposit Schemes Bill, 2018 was approved by the Union Cabinet.
Important facts:
- Objectives:
- To provide comprehensive legislation to deal with illicit deposit schemes in the country.
- To protect the savings of the investors.
- The bill is aimed at tackling the menace of illicit deposit taking activities in the country.
Key features of the Bill:
- Unregulated deposit: The Bill imposes complete prohibition of unregulated deposit taking activity.
- Penalty: It provides for deterrent punishment for promoting or operating an unregulated deposit taking scheme, stringent punishment for fraudulent default in repayment to depositors.
- The Bill has adequate provisions for disgorgement or repayment of deposits in cases where such schemes nonetheless manage to raise deposits illegally.
- The Bill provides for attachment of properties/assets by the competent authority and subsequent realization of assets for repayment to depositors.
- Clear-cut time lines have been provided for attachment of property and restitution of depositors.
- The Bill enables creation of a central online database, for collection and sharing of information on deposit taking activities in the country.
- The Bill defines the “deposit taker” and “deposit”
- The primary responsibility of implementing the provisions of the proposed legislation lies with the State governments.
- The Bill contains a substantive banning clause which bans deposit takers from promoting, operating, issuing advertisements or accepting deposits in any Unregulated Deposit Scheme.
Types of offences:
- Running of Unregulated Deposit Schemes
- Fraudulent default in Regulated Deposit Schemes
- Wrongful inducement in relation to Unregulated Deposit Schemes.