New Delhi, Feb 6 Amid a raging controversy over chit fund scams, the Union Cabinet on Wednesday decided to amend a law to enable banning unregulated deposit schemes with deterrent punishment and fines in a bid to protect small investors.
The Cabinet, chaired by Prime Minister Narendra Modi, decided to amend Banning of Unregulated Deposit Schemes Bill, 2018 accepting recommendations of the Parliamentary Standing Committee that went into the provisions of the Bill.
Briefing the media, Law Minister Ravi Shankar Prasad said any person running such deposit schemes without registration would attract penal provisions of the law. Advertisements of such unregistered schemes and brand ambassadors of such schemes would also be covered in this measure.
“The Bill contains a substantive clause which bans deposit takers from promoting, operating, issuing advertisements or accepting deposits in any unregulated deposit schemes.
“The Bill creates three types of offences, — running of unregulated deposits schemes, fraudulent default in regulated deposit schemes and wrongful inducement in relation to unregulated deposit schemes. The Bill provides for severe punishment and heavy pecuniary fines to act as deterrent,” Prasad said.
Punishments and penalties under the law will be meted out for offences committed after the law has been passed.
The decision to amend the law comes amid a storm over investigations in the Saradha and Rose Valley chit fund schemes that rocked West Bengal and Odisha among other states and triggered a political war between the TMC government and the Modi government at the Centre.
Prasad said the major victims of the chit fund schemes are poor people who invest in small sums.
“In the last four years, CBI has lodged 166 cases of multi-crore chit fund scams since 2015 till November 30, 2018. Maximum cases have been in lodged in West Bengal followed by Odisha. All these cases have origin before the Modi government came to power,” he said.
The Cabinet also decided to maintain an online database of regulated deposit schemes where people can deposit their money.