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Cabinet approves the Banning of Unregulated Deposit Schemes Bill, 2019
Why is it in the news?
- The Union Cabinet has approved the banning of Unregulated Deposit Schemes Bill, 2019.
- It will replace the banning of Unregulated Deposit Schemes Ordinance, 2019.
More in the news
- The Bill will help tackle the menace of illicit deposit taking activities in the country.
- At present the schemes are exploiting regulatory gaps and lack of strict administrative measures to dupe poor and gullible people of their hard-earned savings.
- Concept:(1) Unregulated Deposit Scheme will mean 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.(2) Regulated Deposit Scheme will essentially comprise of schemes that fall under any one of the regulators such as RBI, IRDA, State government etc.
- Salient Features of the Bill:(1) The ban on unregulated deposits and its promotion is expected put a closure to this illicit activity.(2) Any deposit scheme not registered with the government would be treated as an unregulated deposit scheme and would, as such, be banned.(3) The Ordinance has provisions which ban deposit takers from promoting, operating or accepting deposits in any unregulated deposit scheme.
- Many depositors have been taken for a ride by illicit entities running such scheme and duping people.
- An outright ban empowers the government to take action against such entities, while it strengthens the case of regulated banking activities.