Unregulated Deposit Schemes Ordinance, 2019 By CS Kamal Soni

Purpose of the Bill

  • Totally ban all forms of the Unregulated Deposit Schemes.
  • Totally Ban Any fraudulent default in the repayment or return of deposit on maturity or in rendering any specified service promised against such deposit.
  • The focal point of the ordinance is to control and regulate the Unregulated Deposit Scheme.
On whom this Ordinance applicable?

This Ordinance shall apply to only those deposits taken & accepted by non-corporate entities in small amounts from multiple investors by an invitation published in a newspaper under some scheme or arrangement.
Now the question is what does mean by The UNREGULATED DEPOSIT SCHEME.

  • It is a Scheme or an arrangement under which deposits are accepted or solicited by any deposit taker by way of business and which is not a Regulated Deposit Scheme.
Why do we need this Law?

  • As the country progressed, some legislations were made to control the acceptance of deposits and making of loans & advances but they were applicable mostly to the organized entities like a company and an NBFC.
  • However, there was no legislation to regulate such deposits taken by many non-corporate entities like individual, Firm, Cooperative Societies, Trusts etc. 
  • Banning of Unregulated Deposit Schemes Ordinance, 2019proposes to control the flow of deposits amongst non-corporate assessees.
Any specified scheme which is regulated by any of the following regulators shall be called a REGULATED DEPOSIT SCHEME.
  1. Ministry of Corporate Affairs (MCA)
  2. Security & Exchange Board of India (SEBI)
  3. Reserve Bank of India (RBI)
  4. Insurance Regulatory & Development Authority of India (IRDA)
  5. State or UT Government
  6. National Housing Bank (NHB)
  7. Employees Provident Fund Organization
  8. Pension Fund Regulatory & Development Authority of India
  9. Central Registrar Multi-state Cooperative Societies
  10. Deposits accepted under any scheme or an arrangement registered with any regulatory body in India constituted or established under a statute; and
  11. Any other scheme as may be notified by the Central Government under this Ordinance.
Who are the Deposit Takers?

  • Individual/group of individual
  • Association of persons
  • Company
  • Partnership firm
  • Proprietorship concern
  • Limited liability partnership
  • Trust
  • Co-operative society

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