In a bid to save credulous investors from ponzi schemes, the Central government has banned unregulated deposit schemes, a move that may help tackling the menace of illicit deposit-taking activities.

Pursuant to this ordinance now any Individual or group of individuals cannot take any deposit or loan from any person other than relatives, whereas partnership firms can take deposit or loan from relatives or partners only.

Earlier this week, the Union Cabinet chaired by Prime Minister Narendra Modi approved the Promulgation of Unregulated Deposit Schemes Ordinance, 2019. President Ram Nath Kovind on Thursday promulgated the banning of Unregulated Deposit Scheme Ordinance.

The proposed ordinance will immediately tackle the deposit taking activities in the country launched by rapacious operators, which at present are exploiting regulatory gaps and lack of strict administrative measures.

Among the provisions is a ban on unregulated deposit taking schemes, punishment and repayment of deposits in cases where such schemes nonetheless manage to raise deposits illegally.

"No deposit taker shall directly or indirectly promote, operate issue any advertisement soliciting participation or enrolment in or accept deposits in pursuance of an unregulated deposit scheme," the Ordinance said.

The banning of Unregulated Deposit Schemes Bill, 2018 was tabled in Parliament on July 18, 2018, and was referred to the Standing Committee on Finance. The committee submitted its Seventieth Report on the bill to Parliament on January 3, 2019.

In the last four years, the CBI has lodged about 166 cases related to chit funds and multi-crore scams, with the maximum in West Bengal and Odisha.

As per PTI report, the Ordinance also provides for severe punishment ranging from 1 year to 10 years and pecuniary fines ranging from Rs 2 lakh to Rs 50 crore to act as deterrent. It too has adequate provisions for disgorgement or repayment of deposits in cases where such schemes nonetheless manage to raise deposits illegally.

The law provides for attachment of properties or assets and subsequent realisation of assets for repayment to depositors. Clear-cut timelines have been provided for attachment of property and restitution to depositors, the agency reported.

(with inputs from PTI)

Also Read: Pulwama attack: Pakistan feels the pinch as India bans entry of trucks at Wagha border

Edited by Chitranjan Kumar