The Banning of Unregulated Deposits Scheme Bill 2019 provides for a mechanism to ban unregulated deposit schemes and protect the interests of depositors. By ensuring stringent consequences in cases of contravention, this ordinance will help in safeguarding the interest of general public who are fooled by illicit deposit schemes run by unscrupulous elements of society. The Banning of Unregulated Deposit Schemes Ordinance, 2019 (Act) Deposit schemes are of two types: Unregulated Deposit Scheme; Regulated Deposit Scheme; Unregulated Deposit Scheme – Banned. 28. When does the Central Bureau of Investigation inquire and investigate in the cases related? The persons or the competent authority is remaining dissatisfied by the order of the Designated Court, may appeal to the High Court within sixty days from the date of issue of the order. Publication of advertisement of Unregulated Deposit  Scheme. 7 of 2019) has been substituted by passing the Act by parliament. the deposit taker that solicits the deposits shall be punished with imprisonment for a term not less than one year and not more than five years, with a fine not less than two lakh rupees and can extend up to ten lakh rupees. 7 of 2019) (Ordinance) which was replaced by the Banning of Unregulated Deposit Schemes Act 2019 on 31 July 2019 (Ref: Act No. 20. The said ordinance has been promulgated to completely ban unregulated deposit schemes, it prohibit solicitation or acceptance of deposits outside the Regulated Deposit Scheme. Q14. Application of Code of Criminal Procedure, 1973 to proceedings before Designated Court. Ans. In line with the recommendations of the Committee and the Group, the Banning of Unregulated Schemes Ordinance, 2019 (Ordinance) was promulgated on February 21, 2019. In the Securities and Exchange Board of India Act, 1992,—, (i) in section 11, in sub-section (4), for clause (e), the following clause shall be substituted, namely:—. The Banning of Unregulated Deposit Schemes Act was passed in the Lok Sabha but was unable to reach the Rajya Sabha for its deliberations and approval. 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. (2) Nothing contained in sub-section (1) shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. Banning of Unregulated Deposit Schemes Act 2019, All about Banning of Unregulated Deposit Schemes Act, 2019. Which authority is appointed to maintain a database of the deposit takers? Pursuant to this ordinance now any Individual or group of individuals can’t take any deposit or loan from any person other than relatives and Partnership firm can take deposit or loan from relatives of partner or partners only. The Government has issued The Banning of Unregulated Deposit Schemes Ordinance 2019 on 21.02.2019 to stop Ponzi schemes. Context: Cabinet approves the Banning of Unregulated Deposit Schemes Bill, 2019. Any scheme or an arrangement for acceptance of deposits from voting members by a Multi-State Co-operative Society registered under the Multi-State Co-operative Societies Act, 2002 (39 of 2002). (3) On the receipt of the reference under sub-section (1), the Central Government may transfer the investigation of the offence to the Central Bureau of Investigation under section 5 of the Delhi Special Police Establishment Act, 1946. (1) Upon receipt of an application under section 14, the Designated Court shall issue notice to—. Laying of rules. Which authorities are considered competent and what are their roles? The Designated Court has the power to approve the statements and particulars of the dues of the deposit taker from the debtors. 21.02.2019. Punishment for contravention of section 3. The primary purpose of this law is to ban Ponzi schemes, unregulated chit funds including unregulated money circulation schemes, unregulated … 21 of 2019) (Act).In our Ergo dated 7 March 2019 (which can be accessed here) we had provided an … The Banning of Unregulated Deposit Schemes Act 2019 has received the assent of the President on the 31st July, 2019. 0. (1) The Designated Court shall exercise the following powers, namely:—. Q9. The Ordinance is given wide definition of deposit where cover almost all … Short title, extent and commencement. (1) Whenever it is made to appear to the Supreme Court that there is a default in any deposit scheme or deposit schemes of the nature referred to in section 30, the Supreme Court may, by an order, direct that any particular case be transferred from one Designated Court to another Designated Court. “(e) attach, for a period not exceeding ninety days, bank accounts or other property of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder: Provided that the Board shall, within ninety days of the said attachment, obtain confirmation of the said attachment from the Special Court, established under section 26A, having jurisdiction and on such confirmation, such attachment shall continue during the pendency of the aforesaid proceedings and on conclusion of the said proceedings, the provisions of section 28A shall apply: Provided further that only property, bank account or accounts or any transaction entered therein, so far as it relates to the proceeds actually involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder shall be allowed to be attached.”; (ii) in section 28A, after Explanation 3, the following Explanation shall be inserted, namely:—. 14. Which court is allocated or appointed to hear on matters related to the provisions of this act? (ii) Any scheme or an arrangement under which deposits are accepted by a company declared as a Nidhi or a Mutual Benefit Society under section 406 of the Companies Act, 2013 (18 of 2013). The government made a law called the Banning of Unregulated Deposit Scheme Act, 2019 This is the scheme of the government to stop the Ponzi scheme or bring back the looted money by the rich people. Q12. The following kinds of amounts are considered an exception to the definition of deposits under this Act: or any bank or banking company included and defined under section 5 of the Banking Regulation Act, 1949. or any non-banking financial company defined under clause f of Section 45-I of the Reserve Bank of India Act, 1934, and is registered with the RBI or RFI or insurance companies. It also seeks to amend three laws, i.e., the Reserve Bank of India Act, 1934, the Securities and Exchange Board of India Act, 1992 and the Multi-State Co-operative Societies Act, 2002. What are the punishments laid down by the actin cases of default? Pinterest. (1) The Competent Authority shall, within a period of thirty days, which may extend up to sixty days, for reasons to be recorded in writing, from the date of the order of provisional attachment, file an application with such particulars as may be prescribed, before the Designated Court for making the provisional attachment absolute, and for permission to sell the property so attached by public auction or, if necessary, by private sale. The competent authority shall open a bank account in a scheduled bank for purposes related to financial matters. Q5. enforcing the attendance of persons related, issuing commissions for examinations of documents and witnesses, any other in the relation matters, as prescribed. It seeks to amend three laws : The Reserve Bank of India Act, 1934 The … The Banning of Unregulated Deposit Schemes Ordinance, 2019 (Act) Deposit schemes are of two types: Unregulated Deposit Scheme; Regulated Deposit Scheme; Unregulated Deposit Scheme – Banned. It was later passed by the parliament as an Act known as banning of unregulated deposit schemes Act 2019 on 31 st July 2019. VIEWS . The competent authorities’ proceedings shall be deemed as judicial proceedings as under section 193 and section 228 of the Indian Penal Code, 1860. Language English . (4) The Competent Authority shall not dispose of or alienate the property or money attached, except in accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15. The CBI is called for investigation and inquiry for the matters related and connected to the act when the competent authority believes that: Q17. Ans. Punishment for contravention of section 5. Punishment for contravention of section 10. (2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament. Here is what you should know. Your email address will not be published. Facebook. It provides a comprehensive mechanism to ban the unregulated deposit scheme and to protect the interest of depositors and for matters connected therewith … The Banning of Unregulated Deposit Schemes Act, 2019: Long Title: An Act to provide for a comprehensive mechanism to ban the unregulated deposit schemes, other than deposits taken in the ordinary course of business, and to protect the interest of depositors and for matters connected therewith or incidental thereto. (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) Save as otherwise provided in section 31, the provisions of the Code of Criminal Procedure, 1973 shall apply—. from running such deposit schemes luring deposits, and to regulate them, the government brought in the ‘Banning of Unregulated Deposit Schemes Bill, 2018’ in the Parliament. The total value of the amount is of such magnitude that it may significantly affect the public interest. The Ministry of Corporate Affairs, Government of India. No deposit taker, while accepting deposits pursuant to a Regulated Deposit Scheme, shall commit any fraudulent default in the repayment or return of deposit on maturity or in rendering any specified service promised against such deposit. Offences to be cognizable and non-bailable. Context: Cabinet approves the Banning of Unregulated Deposit Schemes Bill, 2019. The government may also appoint other officers as they think fit to assist in discharging their duties for the function of the Act. The Designated Court is empowered to assess the value of the assets of the deposit taker and create a list of the dues. Basic Under Standing of the Ordinance . Ans. No. (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions, not inconsistent with the provisions of this Act, as may appear to it to be necessary for removing the difficulty: Provided that no such order shall be made under this section after the expiry of three years from the commencement of this Act. (2) In case where the money or property has been attached on the permission granted by a Designated Court in another State or Union territory, the application for confirmation of such attachment shall be filed in that Court. The Designated Court shall issue a notice of show cause under section 14 of the act, to the deposit taker and any person whose property is attached under the same, within thirty days from the date of issue. 23. (1) The appropriate Government shall, with the concurrence of the Chief Justice of the concerned High Court, by notification, constitute one or more Courts known as the Designated Courts for such area or areas or such case or cases as may be specified in such notification, which shall be presided over by a Judge not below the rank of a District and Sessions Judge or Additional District and Sessions Judge. (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. The Banning of Unregulated Deposits Scheme Bill 2019 provides for a mechanism to ban unregulated deposit schemes and protect the interests of depositors. The Bill provides for a mechanism to ban unregulated deposit schemes and protect the interests of depositors. To be an unregulated deposit scheme first it should be an agreement or scheme, the scheme is a systematic plan at a large scale to achieve a particular goal of money. SECTIONS . The Banning of Unregulated Deposit Schemes Bill, 2019 was passed by the Lok Sabha on 13.02.2019 but could not be passed by the Rajya Sabha. Notwithstanding anything contained in section 4, no Designated Court shall take cognizance of an offence punishable under that section except upon a complaint made by the Regulator: Provided that the provisions of section 4 and this section shall not apply in relation to a deposit taker which is a company. (i) payment, advance or part payment for the supply or hire of goods or provision of services and is repayable in the event the goods or services are not in fact sold, hired or otherwise provided; (ii) advance received in connection with consideration of an immovable property under an agreement or arrangement subject to the condition that such advance is adjusted against such immovable property as specified in terms of the agreement or arrangement; (iii) security or dealership deposited for the performance of the contract for supply of goods or provision of services; or. The government stated the proposed act, on becoming an approved law will provide a legal framework to all depositors tricked by fraudsters for making deposits … The Government has issued The Banning of Unregulated Deposit Schemes Ordinance 2019 on 21.02.2019 to stop Ponzi schemes. (b) no deposit taker shall, directly or indirectly, promote, operate, issue any advertisement soliciting participation or enrollment in or accept deposits in pursuance of an Unregulated Deposit Scheme. (b) the total value of the amount involved is of such magnitude as to significantly affect the public interest, the Competent Authority shall refer the matter to the Central Government for investigation by the Central Bureau of Investigation. 38. As per clause 4 of Section 2 of the Act, deposits are the amount of money received by way of an advance or loan or in any other form, by any deposit taker with the promise to return whether after a specific period or otherwise, either in cash or in-kind or in the form of the specific service, with or without any benefit in the form of interest, bonus, profit or in any form. An Act to provide for a comprehensive mechanism to ban the unregulated deposit schemes, other than deposits taken in the ordinary course of business, and to protect the interest of depositors and for matters connected therewith or incidental thereto. What is the nature of the offenses under this act? (1) Save as otherwise provided in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 or the Insolvency and Bankruptcy Code, 2016, an order of provisional attachment passed by the Competent Authority, shall have precedence and priority, to the extent of the claims of the depositors, over any other attachment by any authority competent to attach property for repayment of any debts, revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority. As per clause 1 of section 13 of the act, the competent authority shall attach the provisional claims of the depositor over the repayment of any debts, taxes, revenues, and cesses as payable to the appropriate government or local authority. (4) The Competent Authority shall, for the purposes of sub-section (3), have the same powers as vested in a civil court under the Code of Civil Procedure, 1908 while conducting investigation or inquiry in respect of the following matters, namely:—. SCHEMES ACT, 2019 WhatsApp. BE it enacted by Parliament in the Seventieth Year of the Republic of India as follows:—. The act under clause 17 of section 2 states them as schemes or arrangements under which the deposits are accepted or solicited by any deposit taker in the way of business and is not managed by any sectoral ministry or administrative authority and is not given under the first schedule of the act. What kind of deposits are considered under the Ordinance. Ans. 1.1 The Banning of Unregulated Deposit Schemes Ordinance, 2019 (Ordinance)1 was promulgated by the President of India on February 21, 2019 pursuant to Article 123 of the Constitution of India, with the following main objectives:-a) To prohibit solicitation or acceptance of ‘deposits’ outside the ‘Regulated Deposit Scheme’ Background. With the commencement of this act, all the unregulated deposits schemes would be banned, and no deposit taker can directly or indirectly, promote, regulate or issue any announcements that solicit participation or accept any such deposits under the specific scheme. The Act is aimed at tackling the menace of illicit deposit-taking activities in the country. This Act would save gullible investors from ponzi schemes. A scheme or arrangement, under which deposits are accepted or solicited, by any deposit … PRELIMINARY . (2) The following shall also be treated as Regulated Deposit Schemes under this Act, namely:—, (a) deposits accepted under any scheme or an arrangement registered with any regulatory body in India constituted or established under a statute; and. The deposit taker who fraudulently defaults in repayment shall be punished with imprisonment for a term not exceedingly more than 10 years and minimum for 3 years, with a fine of minimum five lakh but may extent to double of the aggregate funds collected in the Unregulated Deposit Schemes. (1) On receipt of information under section 29 or otherwise, if the Competent Authority has reason to believe that the offence relates to a deposit scheme or deposit schemes in which—, (a) the depositors, deposit takers or properties involved are located in more than one State or Union territory in India or outside India; and. The President of India on the 21 st February, 2019 had promulgated the Banning of Unregulated Deposit Schemes Ordinance, 2019. Ans. What are the roles of the Designated Courts under this act? NO. (a) after the words “receive deposits”, the words “from its voting members” shall be inserted; (b) the following Explanation shall be inserted, namely:—. Background. An Act to provide for a comprehensive mechanism to ban the unregulated deposit schemes, other than deposits taken in the ordinary course of business, and to protect the interest of depositors and for matters connected therewith or incidental thereto. Deposit: The Bill defines a deposit as an amount of money received through an advance, a loan, or in any other form, with a promise to be returned with or without interest. 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