PARLIAMENT OF INDIA

RAJYA SABHA

COMMITTEE ON SUBORDINATE LEGISLATION

Rajya Sabha Secretariat, New Delhi

March, 2021/ Magha, 1942 (Saka)

REPORT NO.

246

TWO HUNDRED FORTY SIXTH REPORT

on

Banning of Unregulated Deposit Schemes

Rules, 2020

(Presented on 24th March , 2021)

(Presented on March, 2020)

C O N T E N T S

PAGES

1. COMPOSITION OF THE COMMITTEE (i)

2. INTRODUCTION (ii)

3. REPORT 1 - 12

4. SUMMARY OF OBSERVATIONS/RECOMMENDATIONS 13-18

5. MINUTES 19-22

ANNEXURE I 23-42

ANNEXURE II 43-46

COMPOSITION OF THE COMMITTEE

(2019--2021)

1. Shri Partap Singh Bajwa Chairman

2. Shri Manas Ranjan Bhunia

3. Dr. Vikas Mahatme

4. Shri Surendra Singh Nagar

5. Dr. Amar Patnaik

6. Shri K. K. Ragesh

7. Shri V. Vijayasai Reddy

8. Shri Pradeep Tamta

9. Shri G.V.L. Narasimha Rao

10. Shri Rajendra Gehlot

11. Shri G.C. Chandrashekhar

12. Shri Prem Chand Gupta

13. Shri K.R. Suresh Reddy

14. Shri Tiruchi Siva

15. Vacant (due to sad demise of Shri Abhay Bharadwaj)

SECRETARIAT

1. Shri Arun Sharma, Joint Secretary

2. Shri Ravinder Kumar, Director

3. Shri Prem Singh, Additional Director

4. Shri R.K. Mecolt Singh, Deputy Secretary

5. Smt. Anju Bala Nayar, Committee Officer

6. Shri Anup Sahu, Assistant Committee Officer

(i)

INTRODUCTION

I, the Chairman of the Committee on Subordinate Legislation, having been authorized

by the Committee, do hereby present on its behalf, this Two Hundred and Forty Sixth Report

of the Committee.

2. The Committee examined the matters that came up while scrutinizing the Banning of

Unregulated Deposit Schemes Rules, 2020 and issues relating to them along with the

comments received from the Government.

3. The observations and recommendations, which in the opinion of the Committee,

should be brought to the notice of the House, are contained in the succeeding paragraphs of

the Report.

4. The Committee considered and adopted the draft Report in its meeting held on the

23rd March, 2021

Partap Singh Bajwa Chairman,

Committee on Subordinate Legislation, Rajya Sabha

New Delhi

24th March , 2021

(ii)

Report

on

The Banning of Unregulated Deposit Schemes Rules, 2020

Introduction

India has, in the recent past, witnessed a series of financial frauds in the

form of ponzi schemes, chit fund scams and other such unregulated deposit

schemes which have robbed the people of their hard-earned savings.

Companies/institutions/individuals running such schemes exploit the existing

regulatory gaps and lack of strict administrative and legislative measures to

dupe a large number of people. The most affected victims of these schemes

have been the poor, gullible and financially illiterate people who fall prey to

such schemes easily. In 2016, the then Finance Minister had proposed to bring

in a comprehensive Central legislation during his Union Budget speech to deal

with the menace of such schemes. Subsequently, 'the Banning of Unregulated

Deposit Scheme Ordinance, 2019’ was promulgated on 21st February, 2019 in

order to deter the operators from running such illicit deposit schemes and to ban

them. The Ordinance was then replaced by ‘the Banning of Unregulated Deposit

Schemes Act, 2019’ (Annexure I), which received the assent of the President

on the 31st July, 2019. The Act aims to protect investors/innocent people from

fraudulent investment schemes. The Act covers existing gaps in legislation that

had been exploited by various parties to siphon off large amount of money from

small and innocent investors. Section 37 of the Act provides for Rules to be

made by the Central Government for carrying out the provisions of the Act. In

exercise of the powers conferred by Section 37 of the Act, the Central

Government notified the Banning of Unregulated Deposit Schemes Rules,

2020, (Annexure II) which were published in the Gazette of India on the

12th February, 2020.

2. The main objectives of the Rules are: -

i. The information and other particulars to be taken into consideration

before issuance of an order of provisional attachment, and the manner of

attachment, under sub-section (3) of section 7;

ii. The information to be shared with the Central Database under sub-section

(2) of section 9;

iii. The form, manner and the time within which, the intimation shall be

given to the Central database under sub-section (1) of section 10;

iv. The particulars contained in the application to be filed by the Competent

Authority before the Designated Court for making the provisional

attachment absolute under sub-section (1) of section 14;

v. The procedure to be adopted by the Designated Court before issuing an

order under sub-section (3) of section 15;

vi. Rules under sub-section (1) of section 31 regarding the authorization for

search and seizure; and

vii. The manner of publication of retraction of advertisement under section 33

of the Act.

3. Keeping in view the significance of the Rules in fighting the menace of

illicit deposit schemes in the country, which have become a tool to loot hard

earned money of people, especially the poor and gullible, these rules were

taken up for detailed examination by the Committee. A detailed questionnaire

on the subject was forwarded to the Ministry of Finance (Department of

Financial Services) for their comments/clarifications on the 11th August, 2020.

The Ministry furnished their comments/clarifications thereto on the 17th August,

2020 . The Committee considered the matter at its meeting held on the

19th August, 2020 with the Secretary, Ministry of Finance (Department of

Financial Services) along with other senior Officials from the Ministry, Minutes

of which have been attached herewith. Thereafter, the Ministry had on the

31st August, 2020 sent detailed replies to queries/issues raised by Members

during the said meeting of the Committee. A brief summary of the points raised

by the Committee and the comments of the Ministry are elaborated in the

succeeding paragraphs along with the observations/recommendations of the

Committee.

4. At the outset the Committee enquired about the reasons that led the

Central Government to frame the Banning of Unregulated Deposit Schemes

Rules, 2020. The Secretary informed the Committee that, in the recent past,

there were rising instances of people in various parts of the Country being

defrauded by illicit deposit schemes whereby the worst victims were the poor

and financially illiterate, who had fallen victims to such lucrative inducements.

He stated that many State Governments had their own piece of legislation on the

subject in the past; but these were inadequate to address various issues and thus

the Central Government enacted a comprehensive Central legislation i.e., the

Banning of Unregulated Deposit Schemes Act, 2019 in order to make the

unregulated deposit schemes illegal ab initio, before the schemes could even

take money and dupe people. Subsequently, the Banning of Unregulated

Deposit Schemes Rules, 2020 were framed and notified by the Department of

Financial Services (DFS) on the12th February, 2020 in exercise of the powers

conferred by Section 37 of the Act. He further informed that the Act entrusts the

primary responsibility of implementing the provisions of the legislation to the

State Governments and the Rules further enabled the State Governments to do

so effectively. He stated that the State Governments are required by the Act to

appoint Competent Authorities for carrying out provisions of the Act, and to

designate Courts to try offences under the Act and oversee repayment to

depositors.

5. The Committee notes the replies furnished by the Ministry and

observes that the Ministry’s objective of coming up with a special and

comprehensive law to check illicit deposit schemes from duping people of

their hard earned savings was long overdue and is, therefore, a laudable

step in the right direction. The Committee raised few concerns regarding

the law impacting legitimate business transactions that arise in the normal

course, which could be construed as illicit deposits under this Act. The

Ministry clarified that such deposits done in the normal course of

business are exempted under the Act. The Committee, however, felt that

appropriate provisions must be provided in the Rules to allay the fears of

those indulging in regulated and legitimate deposit schemes. The Act or the

Rules may clearly provide for deposits that constitute legitimate business

transactions and thus fall within deposits taken in “normal course of

business” and the ones that will fall within the ambit of unregulated deposit

schemes, and therefore attract the provisions of this Act. The Committee

further recommends that since the State Governments are important

players in the execution of the Act, their experience and problems/issues

faced by them in implementation of the Rules should be sought from time

to time in order to strengthen the Act and the rules made thereunder.

6. The Committee then took up Rule 2 (d), which talks about ‘Competent

Authority’. Rule 2 (d) states that ―Competent Authority means an authority

appointed by the appropriate Government under Section 7 of the Act. The

Committee enquired whether such Competent Authority has been created and

notified by the appropriate Government. The Ministry informed the Committee

that “appropriate Government” has been defined in Section 2 (1) of the principal

Act as the respective State / Union Territory (UT) Government and only in

cases of UTs without legislature, the Central Government step in as the

“Appropriate Government”. Hence, the Ministry submitted that the Competent

Authority has to be appointed by the respective State/UT Governments, in terms

of Section 7 of the Act. The Ministry informed that to this end, the Department

of Financial Services (DFS) has already written, vide letters dated 28.03.2019,

25.08.2019 and 19.02.2020, to all the State/UT Governments to take necessary

administrative action to appoint their respective Competent Authorities. It

further informed that for UTs without legislature, whose administration comes

under the domain of the Ministry of Home Affairs (MHA), DFS has

written,vide letter dated 19.02.2020, to MHA to appoint the respective

Competent Authorities. As per available information with the Ministry, the

State Governments of Jharkhand, Karnataka, Manipur and Madhya Pradesh

have notified their respective Competent Authorities. The Secretary, however,

assured the Committee that the Ministry would continue to follow it up with the

State Governments for full and complete implementation of the Rules.

7. The Committee notes with dismay, the fact that majority of the

State/UT Governments have so far shown a lax and nonchalant attitude in

the implementation of such crucial legislation. The tardy pace of

implementation is disheartening. Competent Authority has a very

significant and indispensable role in the implementation of Act, whose

main functions include attachment of properties/assets of operators of

illegal schemes, and subsequent realization of assets for repayment to

depositors. The Committee recommends that the DFS should aggressively

pursue the matter with the State/UT Governments and also ask the

Secretary, DFS to request the Union Minister of Finance, if necessary, to

use her good offices to impress upon the State/UT Governments their

responsibilities under the Act and to notify their respective Competent

Authorities as soon as possible. The Committee feels that in case an Act of

Parliament confers a certain obligation or responsibility on the State

Governments to implement the Act or requires them to frame subordinate

legislation to carry out the provisions of the Act, then the State

Governments should adhere to the obligation or responsibility conferred on

them so that the legislation may be implemented in full letter and spirit.

However, the Committee notes that such obligations/responsibilities are not

met in time. This delay in taking action on the part of State Governments

sometimes ends up defeating the main purpose of the legislation enacted by

the Parliament. The Committee, therefore, recommends that the Ministry

should submit a proposal to the Government of India/Cabinet Secretariat

for creating a Central mechanism/agency, to oversee the implementation of

Central Acts by the State/UT Governments and make them accountable

and answerable for any delay on their part in implementing or giving effect

to Acts of Parliament, including framing of Subordinate Legislation

thereunder.

8. The Committee also enquired about the qualifications of ‘Competent

Authority’ to be appointed by the respective State/UT Governments. Section

7(1) of the principal Act, states that the appropriate Government shall, by

notification, appoint one or more officers not below the rank of Secretary to that

Government, as the Competent Authority for the purposes of this Act. Further

Section 7(2) states that the appropriate Government may, by notification,

appoint such other officer or officers as it thinks fit, to assist the Competent

Authority in discharging its functions under this Act. The Committee observed

that given the technical nature of the subject dealt by the Act and the Rules

made thereunder, the Competent Authority should ideally possess some

specialized domain knowledge on the subject. The Committee cited the example

of the Railways Claims Tribunal in which there is one Judge and one Railway

Officer, who is expert in technical knowledge in awarding the claims, and

similarly, in the Juvenile Justice Board, there is one Judge and one

psychologist. The Secretary informed the Committee that the selection of a

Competent Authority has been left to the wisdom of the State Government

under the Act. He further stated that it would be up to them to decide who

actually the Competent Authority is, and that the Central Government has not

really tried to tie the State Governments down by mandating that they have to

create a specialized body for that.

9. The Committee observes from the replies furnished by the Ministry

that it has not offered sufficient justification or rationale for not mandating

an expert to be appointed as Competent Authority. The Committee

strongly feels that one has to have a proper understanding of the deposits,

financial schemes, and must be able to recognize the money trail to be able

to effectively discharge the role of a Competent Authority under the Act.

The Committee, therefore, recommends that the Act or the Rules may be

suitably amended to incorporate provision providing for expertise,

experience and domain knowledge in dealing with financial frauds/crimes,

in order to be eligible for appointment as Competent Authority.

10. The Committee then took up Rule 2(e), which talks about Designated

Courts to be constituted by the appropriate Government under Section 8 of the

Banning of Unregulated Deposit Schemes Act, 2019. The Committee enquired

about the status of constitution of the Designated Courts to be constituted by the

appropriate Government and the limit of their jurisdiction. The Ministry

informed the Committee that Designated Courts have to be notified by the

respective State/UT Governments, in terms of Section 8 of the Act. This has to

be done with the concurrence of the Chief Justice of the respective High Court.

He stated that DFS has already written to all the State/UT

Governments, videLetters dated 28.03.2019, 25.08.2019 and 19.02.2020, to take

necessary administrative action to notify their respective Designated Courts. For

UTs without legislature, whose administration comes within the domain of the

Ministry of Home Affairs (MHA), DFS has written to MHA, vide letter dated

19.02.2020, to notify the respective Designated Courts. The Ministry further

informed that as per available information with DFS, the State Government of

Karnataka has notified its Designated Courts and Madhya Pradesh has written

to its Law Department for the consent of the Chief Justice of Madhya Pradesh

High Court. DFS has sent a reminder request, vide letter dated 14.08.2020, to

all the other States. The Committee also enquired that in cases where the crimes

encompass more than one State, what will be the jurisdiction of the Courts and

how will disputes about jurisdiction be settled. The Committee enquired

whether there can be a provision for a National level body to investigate and

resolve the matter. The Secretary informed the Committee that under Section 30

of the Act Central Government can transfer the investigation of offences under

the Act to the Central Bureau of Investigation (CBI) under Section 5 of the

Delhi Special Police Establishment Act, 1946. He informed that the Competent

Authority has been empowered to refer the matter to the Central Government

for investigation by CBI wherever he/ she has reason to believe that the offence

is related to a scheme in which the depositors/ deposit takers/ properties

involved are located in more than one State or UT and the total value involved

can affect the public interest. Moreover, in cases of multi-State schemes, the

Supreme Court has also been empowered, under Section 20 of the Act, to

transfer cases from one Designated Court to another.

11. The Committee expresses its concern and displeasure over the fact

that majority of the State/UT Governments have been so casual about

implementation of such crucial legislation having a far reaching effect on

public interest. The tardy pace of implementation is disheartening. The

Committee recommends that DFS should pursue the matter with the

State/UT Governments and nudge the concerned State/UT Governments to

expedite the notification of Designated Courts and their jurisdiction under

the Act. Further, the Committee observes that though there is a provision

for referring cases to the CBI, however, referring such cases to CBI are not

as easy in reality, as it sounds on paper. There may be cases in which the

Competent Authority, which functions under the State Government, might

not want to refer the case to the CBI for various political or administrative

reasons. The Committee, therefore, recommends that there should be a

National level body/agency, which can investigate and follow up such

financial frauds independently without any pressure from the Central or

State Governments. The composition and terms & conditions of service of

officials manning such a body may be framed in such a way that they are

insulated from any political or administrative pressures and they may

carry out their mandate without any fear or favour.

12. The Committee then took up Rule 6, regarding the setting up of a

Central Database on Deposit takers in India. Rule 6(1) states that the authority

may require any Regulator or the Competent Authority or any other entity or

person to submit to it, any information in its possession, relating to deposit

takers in India. The Committee enquired whether the aforesaid information is

being furnished by the concerned authorities and also about the penalties in case

of non-compliance of this provision. The Ministry informed the Committee that

a Central Database has to be set up by the Central Government. It further

informed that Section 9 (1) of the Act provides that the Central Government

may designate an authority, whether existing or to be constituted, which shall

create, maintain and operate an online database for information on deposit

takers operating in India. It further informed that the proposal whether to

designate an existing authority as the Central Database (to avoid any duplication

and leverage the existing information databases) or to constitute a new entity for

the purpose, is under consideration of the Ministry and DFS has already

written, vide letter dated 07.08.2020, to the Reserve Bank of India (RBI), to

elicit their views in this context. The Committee was also informed that the non-

compliance of this provision is punishable with fine up to Rs. 5 Lakhs, as

provided in Section 26 of the Act.

13. The Committee observes from the replies furnished by the Ministry

that the creation of Central database of deposit takers under the Rules is of

utmost importance and essential for the early detection of unregulated

deposit schemes. Given its significance, the Committee recommends that

this provision should be effectively implemented without further delay. The

Committee further recommends that DFS and the RBI should expedite the

creation of such database and ensure that all deposit takers duly furnish

the required information to facilitate the differentiation of genuine deposit

schemes from the fraudulent ones. The Committee also recommends that

once the Central Database is set up, the designated authority shall

operationalize a portal accessible to the public, containing information

relating to deposit takers without any further delay.

14. The Committee observed that in many of the cases of illicit deposit

scheme frauds that have come to light, the public is lured to invest in such

schemes by using some celebrities, especially actors, actresses, sports stars,

who endorse/promote such schemes and help them in attracting investments.

The Committee enquired about what action can be taken against people who

support / promote illegal schemes. The Secretary informed the Committee

that Section 5 of the Act provides that no person shall induce another person to

invest in, or become a member or participant of any Unregulated Deposit

Scheme and the punishment prescribed for this under Section 23 is

imprisonment from 1 to 5 years and a fine up to Rs. 10 lakhs. He informed the

Committee that these provisions have been kept in the Bill to specifically deter

persons, including celebrities and brand ambassadors, from defrauding people

by promoting such schemes, because otherwise they would also be liable for

imprisonment and fine.

15. The Committee places its appreciation on record for incorporating

such a salutary and much needed provision in the law. The Committee feels

these days, celebrities have often become the go-to persons for various

companies when it comes to advertising and promoting their

products/services. Celebrity endorsers play a crucial role in increasing

awareness and visibility of a particular product/service and thereby

influencing customer choices in deciding on that particular product/service.

Thus it goes without saying that customer confidence in celebrities

subconsciously makes them select and eventually purchase the said

products and services endorsed. Therefore, it was important to have a

provision in law for such celebrities to ensure that the claims made in their

endorsements are not false, half-truth, misleading or unsubstantiated in

order to protect and safeguard the interests of public at large. The

Committee though feels that since these celebrities with “deep pockets”

charge huge sums of money, often in lakhs and crores, in lieu of their

endorsements, the fine under this Section needs to be imposed heavily so as

to serve as a credible deterrence. The terms of endorsement contract and

the nature and extent of the fraud in scheme may also be taken as relevant

considerations while deciding on the exact amount of the fine to be

imposed. Further, the Committee recommends that the concerned

Celebrity may also be asked to come forth and publish a

clarification/apology for endorsing any fraudulent scheme which has duped

people. This provision will also ensure greater scrutiny and sense of

responsibility on the part of celebrities while agreeing to endorse some

product or service.

16. The Committee then took up Rule 11, regarding retraction of

advertisement by owner of Print or other publications, who had previously

published any offer, promotion or inducement of Unregulated Deposit Schemes.

Rule 11 (1) states that the appropriate Government shall direct the owner of any

newspaper or other publication of any nature, either in print or in electronic

form, to publish a full and fair retraction, unequivocally withdrawing any offer,

promotion or inducement made earlier in any advertisement, statement or

information to any person to become a member of any Unregulated Deposit

Scheme. The Committee enquired whether any newspapers or publications have

been asked to publish such retraction and if there is any penalty imposed on

them in case they fail to publish a full and fair retraction. The Ministry informed

the Committee that the specific details of directions issued in individual

instances will be available with the respective Competent Authorities / State

Governments. It further informed that the principal Act does not prescribe

imprisonment / penalty on the newspapers for non-compliance, however, it is

stated that no newspapers / publications will willfully ignore the directions of

the Government which are provided by law, since such willful disobedience

may result in serious legal action being taken against them. The Ministry has

further informed that the damage to the reputation of newspapers/publications

from having to publish retractions and the cost of using space for retraction will

also serve as a great deterrent for advertising dubious schemes.

17. The Committee observes from the replies furnished by the Ministry

that any newspaper or other publication of any nature, either in print or

electronic form, has the potential to provide wide dissemination, credence

and publicity to a deposit scheme and hence it becomes crucial that only

such schemes are advertised which are prima facie genuine and pass the

test of due diligence. Thus, the Committee recommends that the Act/Rules

should be amended to provide appropriate penalty, civil if not criminal, to

deter the newspapers and other publications from providing any form of

endorsement to fraudulent deposit schemes.

18. The Committee observed that the best and most effective means to

counter menaces like fraudulent and unsustainable unregulated deposit schemes

is education and awareness about its illegality and the difficulty in regulating

such deposit schemes. The Committee, therefore, enquired why there is no

provision for depositors’ education in the principal Act or rules made

thereunder. The Ministry informed the Committee that depositors’ education

and public awareness is an ongoing initiative and no legislative provision in the

Act is required for the same. It further informed that RBI already has an online

portal (https://sachet.rbi.org.in) through which the public is cautioned against

fraudulent schemes/ entities and the public can also obtain information

regarding entities that are allowed to accept deposits, lodge complaints and also

share information regarding illegal acceptance of deposits by unscrupulous

entities. It further informed that SEBI also has a dedicated investor website

http://investor.sebi.gov.in, wherein relevant education/ awareness material and

other useful information have been placed including do’s and don’ts of

investing, for the benefit of the investors.

19. The Committee observes that though there are provisions for

educating the depositors, the awareness about them is arguably still not up

to the desired level. The Committee recommends that the Ministry and

institutions like RBI and SEBI should effectively publicize such provisions

through various modes including advertisements in print and electronic

media if necessary. Further the Committee feels that though no legislative

provision on depositors' education scheme is mandatory under the Act, it

is highly desirable and, therefore, such a scheme can be incorporated in the

Rules, which will go a long way in educating the public and protecting them

from such illicit deposit schemes. Further, the Committee recommends

that the respective State Governments or Competent Authorities under the

Act, should consider incorporating an Unregulated Deposits Schemes

Informants’ Award Scheme in the Rules itself, so as to encourage people to

come forward and intimate the authorities about any unregulated deposit

schemes being run to dupe innocent people especially in the rural areas of

the Country. The Committee further recommends that the RBI may be

given a more pro active and substantial role under the Act in terms of

regulation and supervision of unregulated deposits schemes as it has the

requisite domain expertise, knowledge and resources to act as an effective

check against such fraudulent schemes and hence can nip them in the bud

itself. Further, the Committee observes that given the modus operandi of

such fraudulent schemes, a complaint from the depositor will come only

when he has been defaulted in payment and the operators of such schemes

usually default after two or three years, when they have collected enough

money in deposits. Thus, the Committee recommends that there should be

provisions in the Act/Rules similar to that in the Co-operative Societies Act,

1912 where the law requires all co-operative societies to register before

starting operations. Similarly, all deposit schemes whether regulated or

unregulated should only be allowed to function after complying with the

mandatory registration and preliminary checks in place.

20. The Committee observed that the crux of this legislation, and the rules

made thereunder, is to protect the unsuspecting millions of Indians, who could

fall prey to the fraudulent deposit schemes. It observed that the two lines in this

legislation which are most important pertain to Section 5, which says that no

promise that is false, deceptive or misleading should be made. The Committee

observed that it does not find anything in the rules, which actually relate to the

vital element of what is considered as false, what is deceptive and what is

misleading. The Committee observed that there should be some kind of

guidelines which clearly debar certain kinds of promises being made, because

lots of people get duped with the promise that their money would be doubled in

a specified time. The Committee requested the Ministry to dwell into this issue

and consider for providing guidelines in the Rules itself for guiding the State

Governments. The Secretary informed the Committee that the first Schedule in

the Act clearly stipulates which are the regulated deposit schemes. He informed

that anything which is beyond the ambit of the prescribed regulators and where

somebody is trying to offer all sorts of baits, would amount to an unregulated

scheme and, therefore, immediately get covered under this Act. He further

assured the Committee that the suggestions made by the Hon’ble Members will

be duly examined by the Ministry. He also informed that the DFS would consult

other Departments concerned, particularly the Ministry of Law & Justice and

would make whatever changes that are required in the rules to make it more

explicit. He further informed the Committee that the Ministry would also

circulate a set of guidelines or model rules for helping the State Governments.

21. The Committee is of the considered view that most of the deposit

schemes that have duped depositors are those which have made

unsustainable promises. Hence, the Ministry should lay down clear

guidelines on what constitutes a deceptive scheme and there should be no

ambiguity on it. This would enable people to discern whether a scheme is

illicit or genuine. There are investment frauds involving unregulated

deposits, wherein one party promises high returns on an investment with

little to no risk at all. The early investors in such schemes are repaid by the

scheme acquiring new investors, and so on. Once there are no longer

enough people to secure a new round of investments the scheme collapses

and the investors lose their money. The Committee, therefore,

recommends that more efforts should be made to bring more awareness

and identify and stop these kinds of schemes ab initio i.e., from the very

beginning. The Committee feels that this is very crucial that the

antecedents of the deposit taker or the authenticity of the deposit schemes

are first established before the investors start depositing their hard-earned

money into it. The Committee further recommends that the Ministry may

provide some kind of guidelines, based on experience, including examples

of promises have been found to be false, misleading and deceptive, so that a

State Government before giving any kind of a deposit the sanctity of being

a regulated deposit, does take all this into account. The Committee feels

that this would go a long way in protecting the gullible and

illiterate/financially illiterate investors.

22. The Committee then enquired whether any case of unregulated deposit

schemes have been reported, after these rules have come into force and what is

the status of these cases. The Secretary stated that there are a large number of

States that are yet to implement the complete provisions of the Rules. He stated

that the implementation of Act is still at the infancy stage. However, he stated

that the Department of Financial Services will henceforth try to nudge the State

Governments to quickly implement the provisions of the Act. The Committee

enquired whether the Government of India can issue directions to the States to

implement the Act/Rules without further delay and within a specific time-frame

so that a law made by the Central Government does not remain only on papers

in the States. The Secretary assured the Committee that the Ministry would

write to the Chief Secretaries and that they will also request the Hon’ble

Minister of Finance to write to the Chief Ministers of the States.

23. In conclusion, the Committee notes with concern the tardy

implementation of the Rules and observes that steps should be taken to

make the implementation of Rules more effective. The Committee,

therefore, recommends that the Ministry should strengthen its enforcement

mechanisms so as to ensure that the objectives of the rules, which have a

wide bearing on public interest, are achieved in letter and spirit. The

Committee further recommends that the Ministry should constitute a

Committee/Group of Experts the Union Finance Ministry, headed by some

senior bureaucrat or some renowned expert/economist, having sound

knowledge and background in financial matters, to monitor the

implementation of these Rules and report or make recommendations about

the problems faced in implementation, if any.

24. The Committee is also of the considered view that this menace of

duping people through fraudulent schemes is widely prevalent in certain

States, for instance, the States of West Bengal, Andhra Pradesh, Odisha

and Jharkhand, where it has observed a pattern repeating itself. The

Committee, therefore, recommends that the Ministry should pay special

attention to such states to ensure that the provisions of the Act/Rules are

implemented fully and effectively in such states in order to achieve the

objectives of the Act. The Committee further recommends that the

Ministry along with the RBI may consider introducing special financial

literacy and awareness drives/workshops to educate the common people

about such fraudulent schemes so that they don’t fall prey to them in the

first place.

25. The Committee is hopeful that the Ministry would carry out the

recommendations of the Committee expeditiously under intimation to it.

SUMMARY OF OBSERVATIONS/RECOMMENDATIONS

1. The Committee notes the replies furnished by the Ministry and

observes that the Ministry’s objective of coming up with a special

and comprehensive law to check illicit deposit schemes from duping

people of their hard earned savings was long overdue and is,

therefore, a laudable step in the right direction. The Committee

raised few concerns regarding the law impacting legitimate business

transactions that arise in the normal course, which could be

construed as illicit deposits under this Act. The Ministry clarified

that such deposits done in the normal course of business are

exempted under the Act. The Committee, however, felt that

appropriate provisions must be provided in the Rules to allay the

fears of those indulging in regulated and legitimate deposit schemes.

The Act or the Rules may clearly provide for deposits that constitute

legitimate business transactions and thus fall within deposits taken in

“normal course of business” and the ones that will fall within the

ambit of unregulated deposit schemes, and therefore attract the

provisions of this Act. The Committee further recommends that since

the State Governments are important players in the execution of the

Act, their experience and problems/issues faced by them in

implementation of the Rules should be sought from time to time in

order to strengthen the Act and the rules made thereunder.

2. The Committee notes with dismay, the fact that majority of the

State/UT Governments have so far shown a lax and nonchalant

attitude in the implementation of such crucial legislation. The tardy

pace of implementation is disheartening. Competent Authority has a

very significant and indispensable role in the implementation of Act,

whose main functions include attachment of properties/assets of

operators of illegal schemes, and subsequent realization of assets for

repayment to depositors. The Committee recommends that the DFS

should aggressively pursue the matter with the State/UT

Governments and also ask the Secretary, DFS to request the Union

Minister of Finance, if necessary, to use her good offices to impress

upon the State/UT Governments their responsibilities under the Act

and to notify their respective Competent Authorities as soon as

possible. The Committee feels that in case an Act of Parliament

confers a certain obligation or responsibility on the State

Governments to implement the Act or requires them to frame

subordinate legislation to carry out the provisions of the Act, then the

State Governments should adhere to the obligation or responsibility

conferred on them so that the legislation may be implemented in full

letter and spirit. However, the Committee notes that such

obligations/responsibilities are not met in time. This delay in taking

action on the part of State Governments sometimes ends up defeating

the main purpose of the legislation enacted by the Parliament. The

Committee, therefore, recommends that the Ministry should submit a

proposal to the Government of India/Cabinet Secretariat for creating

a Central mechanism/agency, to oversee the implementation of

Central Acts by the State/UT Governments and make them

accountable and answerable for any delay on their part in

implementing or giving effect to Acts of Parliament, including

framing of Subordinate Legislation thereunder.

3. The Committee observes from the replies furnished by the Ministry

that it has not offered sufficient justification or rationale for not

mandating an expert to be appointed as Competent Authority. The

Committee strongly feels that one has to have a proper

understanding of the deposits, financial schemes, and must be able to

recognize the money trail to be able to effectively discharge the role

of a Competent Authority under the Act. The Committee, therefore,

recommends that the Act or the Rules may be suitably amended to

incorporate provision providing for expertise, experience and

domain knowledge in dealing with financial frauds/crimes, in order

to be eligible for appointment as Competent Authority.

4. The Committee expresses its concern and displeasure over the fact

that majority of the State/UT Governments have been so casual

about implementation of such crucial legislation having a far

reaching effect on public interest. The tardy pace of implementation

is disheartening. The Committee recommends that DFS should

pursue the matter with the State/UT Governments and nudge the

concerned State/UT Governments to expedite the notification of

Designated Courts and their jurisdiction under the Act. Further, the

Committee observes that though there is a provision for referring

cases to the CBI, however, referring such cases to CBI are not as easy

in reality, as it sounds on paper. There may be cases in which the

Competent Authority, which functions under the State Government,

might not want to refer the case to the CBI for various political or

administrative reasons. The Committee, therefore, recommends that

there should be a National level body/agency, which can investigate

and follow up such financial frauds independently without any

pressure from the Central or State Governments. The composition

and terms & conditions of service of officials manning such a body

may be framed in such a way that they are insulated from any

political or administrative pressures and they may carry out their

mandate without any fear or favour.

5. The Committee observes from the replies furnished by the Ministry

that the creation of Central database of deposit takers under the

Rules is of utmost importance and essential for the early detection of

unregulated deposit schemes. Given its significance, the Committee

recommends that this provision should be effectively implemented

without further delay. The Committee further recommends that DFS

and the RBI should expedite the creation of such database and

ensure that all deposit takers duly furnish the required information

to facilitate the differentiation of genuine deposit schemes from the

fraudulent ones. The Committee also recommends that once the

Central Database is set up, the designated authority shall

operationalize a portal accessible to the public, containing

information relating to deposit takers without any further delay.

6. The Committee places its appreciation on record for incorporating

such a salutary and much needed provision in the law. The

Committee feels these days, celebrities have often become the go-to

persons for various companies when it comes to advertising and

promoting their products/services. Celebrity endorsers play a crucial

role in increasing awareness and visibility of a particular

product/service and thereby influencing customer choices in

deciding on that particular product/service. Thus it goes without

saying that customer confidence in celebrities subconsciously makes

them select and eventually purchase the said products and services

endorsed. Therefore, it was important to have a provision in law for

such celebrities to ensure that the claims made in their

endorsements are not false, half-truth, misleading or

unsubstantiated in order to protect and safeguard the interests of

public at large. The Committee though feels that since these

celebrities with “deep pockets” charge huge sums of money, often in

lakhs and crores, in lieu of their endorsements, the fine under this

Section needs to be imposed heavily so as to serve as a credible

deterrence. The terms of endorsement contract and the nature and

extent of the fraud in scheme may also be taken as relevant

considerations while deciding on the exact amount of the fine to be

imposed. Further, the Committee recommends that the concerned

Celebrity may also be asked to come forth and publish a

clarification/apology for endorsing any fraudulent scheme which has

duped people. This provision will also ensure greater scrutiny and

sense of responsibility on the part of celebrities while agreeing to

endorse some product or service.

7. The Committee observes from the replies furnished by the Ministry

that any newspaper or other publication of any nature, either in

print or electronic form, has the potential to provide wide

dissemination, credence and publicity to a deposit scheme and hence

it becomes crucial that only such schemes are advertised which

are prima facie genuine and pass the test of due diligence. Thus, the

Committee recommends that the Act/Rules should be amended to

provide appropriate penalty, civil if not criminal, to deter the

newspapers and other publications from providing any form of

endorsement to fraudulent deposit schemes.

8. The Committee observes that though there are provisions for

educating the depositors, the awareness about them is arguably still

not up to the desired level. The Committee recommends that the

Ministry and institutions like RBI and SEBI should effectively

publicize such provisions through various modes including

advertisements in print and electronic media if necessary. Further

the Committee feels that though no legislative provision on

depositors' education scheme is mandatory under the Act, it is

highly desirable and, therefore, such a scheme can be incorporated in

the Rules, which will go a long way in educating the public and

protecting them from such illicit deposit schemes. Further, the

Committee recommends that the respective State Governments or

Competent Authorities under the Act, should consider incorporating

an Unregulated Deposits Schemes Informants’ Award Scheme in the

Rules itself, so as to encourage people to come forward and intimate

the authorities about any unregulated deposit schemes being run to

dupe innocent people especially in the rural areas of the Country.

The Committee further recommends that the RBI may be given a

more pro active and substantial role under the Act in terms of

regulation and supervision of unregulated deposits schemes as it has

the requisite domain expertise, knowledge and resources to act as an

effective check against such fraudulent schemes and hence can nip

them in the bud itself. Further, the Committee observes that given

the modus operandi of such fraudulent schemes, a complaint from the

depositor will come only when he has been defaulted in payment and

the operators of such schemes usually default after two or three

years, when they have collected enough money in deposits. Thus, the

Committee recommends that there should be provisions in the

Act/Rules similar to that in the Co-operative Societies Act, 1912

where the law requires all co-operative societies to register before

starting operations. Similarly, all deposit schemes whether regulated

or unregulated should only be allowed to function after complying

with the mandatory registration and preliminary checks in place.

9. The Committee is of the considered view that most of the deposit

schemes that have duped depositors are those which have made

unsustainable promises. Hence, the Ministry should lay down clear

guidelines on what constitutes a deceptive scheme and there should

be no ambiguity on it. This would enable people to discern whether a

scheme is illicit or genuine. There are investment frauds involving

unregulated deposits, wherein one party promises high returns on an

investment with little to no risk at all. The early investors in such

schemes are repaid by the scheme acquiring new investors, and so on.

Once there are no longer enough people to secure a new round of

investments the scheme collapses and the investors lose their money.

The Committee, therefore, recommends that more efforts should be

made to bring more awareness and identify and stop these kinds of

schemes ab initio i.e., from the very beginning. The Committee feels

that this is very crucial that the antecedents of the deposit taker or

the authenticity of the deposit schemes are first established before the

investors start depositing their hard-earned money into it. The

Committee further recommends that the Ministry may provide some

kind of guidelines, based on experience, including examples of

promises have been found to be false, misleading and deceptive, so

that a State Government before giving any kind of a deposit the

sanctity of being a regulated deposit, does take all this into account.

The Committee feels that this would go a long way in protecting the

gullible and illiterate/financially illiterate investors.

10. In conclusion, the Committee notes with concern the tardy

implementation of the Rules and observes that steps should be taken

to make the implementation of Rules more effective. The Committee,

therefore, recommends that the Ministry should strengthen its

enforcement mechanisms so as to ensure that the objectives of the

rules, which have a wide bearing on public interest, are achieved

in letter and spirit. The Committee further recommends that the

Ministry should constitute a Committee/Group of Experts the Union

Finance Ministry, headed by some senior bureaucrat or some

renowned expert/economist, having sound knowledge and

background in financial matters, to monitor the implementation of

these Rules and report or make recommendations about the

problems faced in implementation, if any.

11. The Committee is also of the considered view that this menace of

duping people through fraudulent schemes is widely prevalent in

certain States, for instance, the States of West Bengal, Andhra

Pradesh, Odisha and Jharkhand, where it has observed a pattern

repeating itself. The Committee, therefore, recommends that the

Ministry should pay special attention to such states to ensure that the

provisions of the Act/Rules are implemented fully and effectively in

such states in order to achieve the objectives of the Act. The

Committee further recommends that the Ministry along with the RBI

may consider introducing special financial literacy and awareness

drives/workshops to educate the common people about such

fraudulent schemes so that they don’t fall prey to them in the first

place.

12. The Committee is hopeful that the Ministry would carry out the

recommendations of the Committee expeditiously under intimation

to it.

***

THE BANNING OF UNREGULATED DEPOSITSCHEMES ACT, 2019

NO. 21 OF 2019[31st July, 2019.]

An Act to provide for a comprehensive mechanism to ban the unregulated depositschemes, other than deposits taken in the ordinary course of business, andto protect the interest of depositors and for matters connected therewith orincidental thereto.BE it enacted by Parliament in the Seventieth Year of the Republic of India as follows:—

CHAPTER I

PRELIMINARY

1. (1) This Act may be called the Banning of Unregulated Deposit Schemes Act, 2019.

(2) It extends to the whole of India except the State of Jammu and Kashmir.

(3) It shall be deemed to have come into force on the 21st day of February, 2019.

Short title,extent andcommencement.

jftLVªh lañ Mhñ ,yñ—(,u)04@0007@2003—19

vlk/kkj.kEXTRAORDINARY

Hkkx II — [k.M 1PART II — Section 1

izkf/kdkj ls izdkf'krPUBLISHED BY AUTHORITY

lañ 40] ubZ fnYyh] cq/kokj] tqykbZ 31] 2019@Jko.k 9] 1941 ¼'kd½No. 40] NEW DELHI, WEDNESDAY, JULY 31, 2019/SHRAVANA 9, 1941 (SAKA)

bl Hkkx esa fHkUu i`"B la[;k nh tkrh gS ftlls fd ;g vyx ladyu ds :i esa j[kk tk ldsASeparate paging is given to this Part in order that it may be filed as a separate compilation.

REGISTERED NO. DL—(N)04/0007/2003—19

MINISTRY OF LAW AND JUSTICE(Legislative Department)

New Delhi, the 31st July, 2019/Shravana 9, 1941 (Saka)

The following Act of Parliament received the assent of the President on the31st July, 2019, and is hereby published for general information:—

2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

2. In this Act, unless the context otherwise requires,—

(1) “appropriate Government” means in respect of matters relating to,—

(i) the Union territory without legislature, the Central Government;

(ii) the Union territory of Puducherry, the Government of that Unionterritory;

(iii) the Union territory of Delhi, the Government of that Unionterritory; and

(iv) the State, the State Government;

(2) “company” shall have the same meaning as assigned to it in clause (20) ofsection 2 of the Companies Act, 2013;

(3) “Competent Authority” means an Authority appointed by the appropriateGovernment under section 7;

(4) “deposit” means an amount of money received by way of an advance orloan or in any other form, by any deposit taker with a promise to return whether aftera specified period or otherwise, either in cash or in kind or in the form of a specifiedservice, with or without any benefit in the form of interest, bonus, profit or in anyother form, but does not include—

(a) amounts received as loan from a scheduled bank or a co-operativebank or any other banking company as defined in section 5 of the BankingRegulation Act, 1949;

(b) amounts received as loan or financial assistance from the PublicFinancial Institutions notified by the Central Government in consultation withthe Reserve Bank of India or any non-banking financial company as defined inclause (f) of section 45-I of the Reserve Bank of India Act, 1934 and is registeredwith the Reserve Bank of India or any Regional Financial Institutions orinsurance companies;

(c) amounts received from the appropriate Government, or any amountreceived from any other source whose repayment is guaranteed by theappropriate Government, or any amount received from a statutory authorityconstituted under an Act of Parliament or a State Legislature;

(d) amounts received from foreign Governments, foreign or internationalbanks, multilateral financial institutions, foreign Government owneddevelopment financial institutions, foreign export credit collaborators, foreignbodies corporate, foreign citizens, foreign authorities or person resident outsideIndia subject to the provisions of the Foreign Exchange Management Act, 1999and the rules and regulations made thereunder;

(e) amounts received by way of contributions towards the capital bypartners of any partnership firm or a limited liability partnership;

(f) amounts received by an individual by way of loan from his relatives oramounts received by any firm by way of loan from the relatives of any of itspartners;

(g) amounts received as credit by a buyer from a seller on the sale of anyproperty (whether movable or immovable);

(h) amounts received by an asset re-construction company which isregistered with the Reserve Bank of India under section 3 of the Securitisationand Reconstruction of Financial Assets and Enforcement of Security InterestAct, 2002;

18 of 2013.

Definitions.

10 of 1949.

2 of 1934.

42 of 1999.

54 of 2002.

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 3

(i) any deposit made under section 34 or an amount accepted by a politicalparty under section 29B of the Representation of the People Act, 1951;

(j) any periodic payment made by the members of the self-help groupsoperating within such ceilings as may be prescribed by the State Governmentor Union territory Government;

(k) any other amount collected for such purpose and within such ceilingsas may be prescribed by the State Government;

(l) an amount received in the course of, or for the purpose of, businessand bearing a genuine connection to such business including—

(i) payment, advance or part payment for the supply or hire ofgoods or provision of services and is repayable in the event the goods orservices are not in fact sold, hired or otherwise provided;

(ii) advance received in connection with consideration of animmovable property under an agreement or arrangement subject to thecondition that such advance is adjusted against such immovable propertyas specified in terms of the agreement or arrangement;

(iii) security or dealership deposited for the performance of thecontract for supply of goods or provision of services; or

(iv) an advance under the long-term projects for supply of capitalgoods except those specified in item (ii):

Provided that if the amounts received under items (i) to (iv) becomerefundable, such amounts shall be deemed to be deposits on the expiryof fifteen days from the date on which they become due for refund:

Provided further that where the said amounts become refundable,due to the deposit taker not obtaining necessary permission or approvalunder the law for the time being in force, wherever required, to deal in thegoods or properties or services for which money is taken, such amountsshall be deemed to be deposits.

Explanation.—For the purposes of this clause,—(i) in respect of a company, the expression “deposit” shall

have the same meaning as assigned to it under the CompaniesAct, 2013;

(ii) in respect of a non-banking financial company registeredunder the Reserve Bank of India Act, 1934, the expression “deposit”shall have the same meaning as assigned to it in clause (bb) ofsection 45-I of the said Act;

(iii) the expressions “partner” and “firm” shall have themeanings respectively assigned to them under the IndianPartnership Act, 1932;

(iv) the expression “partner” in respect of a limited liabilitypartnership shall have the same meaning as assigned to it inclause (q) of sub-section (1) of section 2 of the Limited LiabilityPartnership Act, 2008;

(v) the expression “relative” shall have the same meaning asassigned to it in the Companies Act, 2013;

(5) “depositor” means any person who makes a deposit under this Act;

(6) “deposit taker” means—

(i) any individual or group of individuals;

43 of 1951.

18 of 2013.

6 of 2009.

9 of 1932.

2 of 1934.

18 of 2013.

4 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

(ii) a proprietorship concern;

(iii) a partnership firm (whether registered or not);

(iv) a limited liability partnership registered under the Limited LiabilityPartnership Act, 2008;

(v) a company;

(vi) an association of persons;

(vii) a trust (being a private trust governed under the provisions of theIndian Trusts Act, 1882 or a public trust, whether registered or not);

(viii) a co-operative society or a multi-State co-operative society; or

(ix) any other arrangement of whatsoever nature, receiving or solicitingdeposits, but does not include—

(i) a Corporation incorporated under an Act of Parliament or a StateLegislature;

(ii) a banking company, a corresponding new bank, the State Bankof India, a subsidiary bank, a regional rural bank, a co-operative bank ora multi-State co-operative bank as defined in the Banking RegulationAct,1949;

(7) “Designated Court” means a Designated Court constituted by the appropriateGovernment under section 8;

(8) “insurer” shall have the same meaning as assigned to it in clause (9) ofsection 2 of the Insurance Act, 1938;

(9) “notification” means a notification published in the Official Gazette and theexpression “notify” shall be construed accordingly;

(10) “person” includes—(i) an individual;(ii) a Hindu Undivided Family;(iii) a company;(iv) a trust;(v) a partnership firm;(vi) a limited liability partnership;(vii) an association of persons;(viii) a co-operative society registered under any law for the time being

in force relating to co-operative societies; or(ix) every artificial juridical person, not falling within any of the preceding

sub-clauses;

(11) “prescribed” means prescribed by the rules made by the Central Governmentor, as the case may be, the State Government under this Act;

(12) “property” means any property or assets of every description, whethercorporeal or incorporeal, movable or immovable, tangible or intangible, and includesdeeds and instruments evidencing title to, or interest in, such property or assets,wherever located;

(13) “public financial institution” shall have the same meaning as assigned toit in clause (72) of section 2 of the Companies Act, 2013;

(14) “Regulated Deposit Scheme” means the Schemes specified undercolumn (3) of the First Schedule;

6 of 2009.

2 of 1882.

10 of 1949.

4 of 1938.

18 of 2013.

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 5

(15) “Regulator” means the Regulator specified in column (2) of the FirstSchedule;

(16) “Schedule” means the Schedule appended to this Act;

(17) “Unregulated Deposit Scheme” means a Scheme or an arrangement underwhich deposits are accepted or solicited by any deposit taker by way of business andwhich is not a Regulated Deposit Scheme, as specified under column (3) of the FirstSchedule.

CHAPTER II

BANNING OF UNREGULATED DEPOSIT SCHEMES

3. On and from the date of commencement of this Act,—

(a) the Unregulated Deposit Schemes shall be banned; and

(b) no deposit taker shall, directly or indirectly, promote, operate, issue anyadvertisement soliciting participation or enrolment in or accept deposits in pursuanceof an Unregulated Deposit Scheme.

4. 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 inrendering any specified service promised against such deposit.

5. No person by whatever name called shall knowingly make any statement, promiseor forecast which is false, deceptive or misleading in material facts or deliberately concealany material facts, to induce another person to invest in, or become a member or participantof any Unregulated Deposit Scheme.

6. A prize chit or a money circulation scheme banned under the provisions of the PrizeChits and Money Circulation Scheme (Banning) Act, 1978 shall be deemed to be anUnregulated Deposit Scheme under this Act.

CHAPTER III

AUTHORITIES

7. (1) The appropriate Government shall, by notification, appoint one or more officersnot below the rank of Secretary to that Government, as the Competent Authority for thepurposes of this Act.

(2) The appropriate Government may, by notification, appoint such other officer orofficers as it thinks fit, to assist the Competent Authority in discharging its functions underthis Act.

(3) Where the Competent Authority or officers appointed under sub-section (2), forthe purposes of this section, has reason to believe (the reason for such belief to be recordedin writing), on the basis of such information and particulars as may be prescribed, that anydeposit taker is soliciting deposits in contravention of section 3, he may, by an order inwriting, provisionally attach the deposits held by the deposit taker and the money or otherproperty acquired either in the name of the deposit taker or in the name of any other personon behalf of the deposit taker from the date of the order, in such manner as may be prescribed.

(4) The Competent Authority shall, for the purposes of sub-section (3), have thesame powers as vested in a civil court under the Code of Civil Procedure, 1908 whileconducting investigation or inquiry in respect of the following matters, namely:—

(a) discovery and inspection;

(b) enforcing the attendance of any person, including any officer of a reportingentity and examining him on oath;

5 of 1908.

Banning ofUnregulatedDepositSchemes.

43 of 1978.

Fraudulentdefault inRegulatedDepositSchemes.

Wrongfulinducement inrelation toUnregulatedDepositSchemes.

Certainscheme to beUnregulatedDepositScheme.

CompetentAuthority.

6 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

(c) compelling the production of records;

(d) receiving evidence on affidavits;

(e) issuing commissions for examination of witnesses and documents; and

(f) any other matter which may be prescribed.

(5) The Competent Authority shall have power to summon any person whoseattendance he considers necessary whether to give evidence or to produce any recordsduring the course of any investigation or proceeding under this section.

(6) All the persons so summoned shall be bound to attend in person or throughauthorised agents, as such officer may direct, and shall be bound to state the truth uponany subject respecting which they are examined or make statements, and produce suchdocuments as may be required.

(7) Every proceeding under sub-sections (4) and (5) shall be deemed to be a judicialproceeding within the meaning of section 193 and section 228 of the Indian Penal Code.

(8) Subject to any rules made in this behalf by the Central Government, any officerreferred to in sub-section (2) may impound and retain in his custody for such period, ashe thinks fit, any records produced before him in any proceedings under this Act:

Provided that the officer or officers referred to in sub-section (2) shall not—

(a) impound any records without recording his reasons for so doing; or

(b) retain in his custody any such records for a period exceeding three months,without obtaining the previous approval of the Competent Authority.

8. (1) The appropriate Government shall, with the concurrence of the Chief Justiceof the concerned High Court, by notification, constitute one or more Courts known asthe Designated Courts for such area or areas or such case or cases as may be specifiedin such notification, which shall be presided over by a Judge not below the rank of aDistrict and Sessions Judge or Additional District and Sessions Judge.

(2) No Court other than the Designated Court shall have jurisdiction in respect ofany matter to which the provisions of this Act apply.

(3) When trying an offence under this Act, the Designated Court may also try anoffence, other than an offence under this Act, with which the accused may, under theCode of Criminal Procedure, 1973, be charged at the same trial.

CHAPTER IVINFORMATION ON DEPOSIT TAKERS

9. (1) The Central Government may designate an authority, whether existing or tobe constituted, which shall create, maintain and operate an online database for informationon deposit takers operating in India.

(2) The authority designated under sub-section (1) may require any Regulator orthe Competent Authority to share such information on deposit takers, as may beprescribed.

10. (1) Every deposit taker which commences or carries on its business as such onor after the commencement of this Act shall intimate the authority referred to insub-section (1) of section 9 about its business in such form and manner and within suchtime, as may be prescribed.

(2) The Competent Authority may, if it has reason to believe that the deposits arebeing solicited or accepted pursuant to an Unregulated Deposit Scheme, direct anydeposit taker to furnish such statements, information or particulars, as it considersnecessary, relating to or connected with the deposits received by such deposit taker.

45 of 1860.

DesignatedCourt.

Informationof business bydeposit taker.

Centraldatabase.

2 of 1974.

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 7

Explanation.—For the removal of doubts, it is hereby clarified that—

(a) the requirement of intimation under sub-section (1) is applicable to deposittakers accepting or soliciting deposits as defined in clause (4) of section 2; and

(b) the requirement of intimation under sub-section (1) applies to a company,if the company accepts the deposits under Chapter V of the Companies Act, 2013.

11. (1) The Competent Authority shall share all information received undersection 29 with the Central Bureau of Investigation and with the authority which may bedesignated by the Central Government under section 9.

(2) The appropriate Government, any Regulator, income-tax authorities or anyother investigation agency, having any information or documents in respect of the offenceinvestigated under this Act by the police or the Central Bureau of Investigation, shallshare all such information or documents with the police or the Central Bureau ofInvestigation.

(3) Where the principal officer of any banking company, a corresponding newbank, the State Bank of India, a subsidiary bank, a regional rural bank, a co-operativebank or a multi-State co-operative bank has reason to believe that any client is a deposittaker and is acting in contravention to the provisions of this Act, he shall forthwithinform the same to the Competent Authority.

CHAPTER V

RESTITUTION TO DEPOSITORS

12. Save as otherwise provided in the Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act, 2002 or the Insolvency and BankruptcyCode, 2016, any amount due to depositors from a deposit taker shall be paid in priorityover all other debts and all revenues, taxes, cesses and other rates payable to theappropriate Government or the local authority.

13. (1) Save as otherwise provided in the Securitisation and Reconstruction ofFinancial Assets and Enforcement of Security Interest Act, 2002 or the Insolvency andBankruptcy Code, 2016, an order of provisional attachment passed by the CompetentAuthority, 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 repaymentof any debts, revenues, taxes, cesses and other rates payable to the appropriateGovernment or the local authority.

(2) Where an order of provisional attachment has been passed by the CompetentAuthority—

(a) such attachment shall continue until an order is passed undersub-section (3) or sub-section (5) of section 15 by the Designated Court;

(b) all the attached money or property of the deposit taker and the personsmentioned therein shall vest in the Competent Authority and shall remain so vestedtill further order of the Designated Court.

(3) The Competent Authority shall open an account in a scheduled bank for thepurpose of crediting and dealing with the money realised under this Act, which shall notbe utilised except under the instructions of the Designated Court.

(4) The Competent Authority shall not dispose of or alienate the property or moneyattached, except in accordance with the order of the Designated Court undersub-section (3) or sub-section (5) of section 15.

Informationto be shared.

Priority ofdepositors'claim.

Precedence ofattachment.

18 of 2013.

54 of 2002.31 of 2016.

54 of 2002.31 of 2016.

8 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

(5) Notwithstanding anything contained in sub-section (4), the Competent Authoritymay, if it thinks it expedient, order the immediate sale of perishable items or assets, and theproceeds of the sale shall be utilised in the same manner as provided for other property.

14. (1) The Competent Authority shall, within a period of thirty days, which mayextend up to sixty days, for reasons to be recorded in writing, from the date of the order ofprovisional attachment, file an application with such particulars as may be prescribed,before the Designated Court for making the provisional attachment absolute, and forpermission to sell the property so attached by public auction or, if necessary, by privatesale.

(2) In case where the money or property has been attached on the permission grantedby a Designated Court in another State or Union territory, the application for confirmationof such attachment shall be filed in that Court.

15. (1) Upon receipt of an application under section 14, the Designated Court shallissue notice to—

(a) the deposit taker; and

(b) any person whose property is attached under section 14,

to show cause, within a period of thirty days from the date of issue of notice, as to why theorder of attachment should not be made absolute and the properties so attached be sold.

(2) The Designated Court shall also issue notice to all other persons represented toit as having or being likely to claim any interest or title in the property, to appear on the samedate as persons referred to in sub-section (1) to raise objections, if they so desire, to theattachment of the property.

(3) The Designated Court shall, after adopting such procedure as may be prescribed,pass an order—

(a) making the provisional order of attachment absolute; or

(b) varying it by releasing a portion of the property from attachment; or

(c) cancelling the provisional order of attachment,

and in case of an order under clause (a) or clause (b), direct the Competent Authority to sellthe property so attached by public auction or, if necessary, by private sale and realise thesale proceeds.

(4) The Designated Court shall not, in varying or cancelling the provisional order ofattachment, release any property from attachment, unless it is satisfied that—

(a) the deposit taker or the person referred to in sub-section (1) has interest insuch property; and

(b) there shall remain an amount or property sufficient for repayment to thedepositors of such deposit taker.

(5) The Designated Court shall pass such order or issue such direction as may benecessary for the equitable distribution among the depositors of the money attached orrealised out of the sale.

(6) The Designated Court shall endeavour to complete the proceedings under thissection within a period of one hundred and eighty days from the date of receipt of theapplication referred to in sub-section (1).

16. (1) Where the Designated Court is satisfied that there is a reasonable cause forbelieving that the deposit taker has transferred any property otherwise than in goodfaith and not for commensurate consideration, it may, by notice, require any transferee ofsuch property, whether or not he received the property directly from the said deposit

Confirmationof attachmentby DesignatedCourt.

Attachmentof property ofmala fidetransferees.

Applicationforconfirmationof attachmentand sale ofproperty.

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 9

taker, to appear on a date to be specified in the notice and show cause why so much ofthe transferee’s property as is equivalent to the proper value of the property transferredshould not be attached.

(2) Where the said transferee does not appear and show cause on the specifieddate or where the Designated Court is satisfied that the transfer of the property to thesaid transferee was not a bona fide transfer and not for commensurate consideration, itshall order the attachment of so much of the said transferee’s property as in its opinionis equivalent to the proper value of the property transferred.

17. (1) Any deposit taker or a person referred to in sub-section (1) of section 15, ortransferee referred to in section 16 whose property is about to be attached or has beenprovisionally attached under this Act, may, at any time before the confirmation ofattachment, apply to the Designated Court for permission to deposit the fair value of theproperty in lieu of attachment.

(2) While allowing the deposit taker or person or transferee referred to insub-section (1) to make the deposit under sub-section (1), the Designated Court mayorder such deposit taker or person or transferee to pay any sum towards costs as may beapplicable.

18. (1) The Designated Court shall exercise the following powers, namely:—

(a) power to approve the statement of dues of the deposit taker due fromvarious debtors;

(b) power to assess the value of the assets of the deposit taker and finalisethe list of the depositors and their respective dues;

(c) power to direct the Competent Authority to take possession of any assetsbelonging to or in the control of the deposit taker and to sell, transfer or realise theattached assets, either by public auction or by private sale as it deems fit dependingupon the nature of assets and credit the sale proceeds thereof to its bank account;

(d) power to approve the necessary expenditure to be incurred by theCompetent Authority for taking possession and realisation of the assets of thedeposit taker;

(e) power to pass an order for full payment to the depositors by the CompetentAuthority or an order for proportionate payment to the depositors in the event, themoney so realised is not sufficient to meet the entire deposit liability;

(f) power to direct any person, who has made profit or averted loss byindulging in any transaction or activity in contravention of the provisions of thisAct, to disgorge an amount equivalent to the wrongful gain made or loss avertedby such contravention; and

(g) power to pass any other order which the Designated Court deems fit forrealisation of assets of the deposit taker and for repayment of the same to thedepositors of such deposit taker or on any other matter or issue incidental thereto.

(2) On the application of any person interested in any property attached andvested in the Competent Authority under this Act and after giving such CompetentAuthority an opportunity of being heard, make such order as the Designated Courtconsiders just and reasonable for—

(a) providing from such of the property attached and vested in the CompetentAuthority as the applicant claims an interest in, such sums as may be reasonablynecessary for the maintenance of the applicant and of his family, and for expensesconnected with the defence of the applicant where criminal proceedings have beeninitiated against him in the Designated Court under this Act; or

Payment inlieu ofattachment.

Powers ofDesignatedCourt.

10 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

(b) safeguarding, so far as may be practicable, the interest of any businessaffected by the attachment.

Explanation.—For the purposes of this section, the expression “deposittaker” includes the directors, promoters, managers or members of said establishmentor any other person whose property or assets have been attached under this Act.

19. Any person including the Competent Authority, if aggrieved by any final orderof the Designated Court under this Chapter, may appeal to the High Court, within aperiod of sixty days from the date of such order:

Provided that the High Court may entertain the appeal after the expiry of the saidperiod of sixty days, if it is satisfied that the appellant was prevented by sufficient causefrom preferring the appeal in time.

Explanation.—The expression “High Court” means the High Court of a State orUnion territory where the Designated Court is situated.

20. (1) Whenever it is made to appear to the Supreme Court that there is a defaultin any deposit scheme or deposit schemes of the nature referred to in section 30, theSupreme Court may, by an order, direct that any particular case be transferred from oneDesignated Court to another Designated Court.

(2) The Supreme Court may act under this section only on an application filed bythe Competent Authority or any interested party, and every such application shall besupported by an affidavit.

(3) Where an application for the exercise of the powers conferred by this section isdismissed, the Supreme Court may, if it is of opinion that the application was frivolous orvexatious, order the applicant to pay by way of compensation to any person who hasopposed the application such sum not exceeding fifty thousand rupees as it may considerappropriate in the circumstances of the case.

CHAPTER VI

OFFENCES AND PUNISHMENTS

21. (1) Any deposit taker who solicits deposits in contravention of section 3 shallbe punishable with imprisonment for a term which shall not be less than one year butwhich may extend to five years and with fine which shall not be less than two lakhrupees but which may extend to ten lakh rupees.

(2) Any deposit taker who accepts deposits in contravention of section 3 shall bepunishable with imprisonment for a term which shall not be less than two years butwhich may extend to seven years and with fine which shall not be less than three lakhrupees but which may extend to ten lakh rupees.

(3) Any deposit taker who accepts deposits in contravention of section 3 andfraudulently defaults in repayment of such deposits or in rendering any specified service,shall be punishable with imprisonment for a term which shall not be less than three yearsbut which may extend to ten years and with fine which shall not be less than five lakhrupees but which may extend to twice the amount of aggregate funds collected from thesubscribers, members or participants in the Unregulated Deposit Scheme.

Explanation.—For the purposes of this Act,—

(i) the expression “fraudulently” shall have the same meaning as assigned toit in section 25 of the Indian Penal Code;

(ii) where the terms of the Deposit Scheme are entirely impracticable orunviable, the terms shall be relevant facts showing an intention to defraud.

Appeal toHigh Court.

Power ofSupreme Courtto transfercases.

Punishmentforcontraventionof section 3.

45 of 1860.

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 11

22. Any deposit taker who contravenes the provisions of section 4 shall bepunishable with imprisonment for a term which may extend to seven years, or with finewhich shall not be less than five lakh rupees but which may extend to twenty-five crorerupees or three times the amount of profits made out of the fraudulent default referred toin said section, whichever is higher, or with both.

23. Any person who contravenes the provisions of section 5 shall be punishablewith imprisonment for a term which shall not be less than one year but which may extendto five years and with fine which may extend to ten lakh rupees.

24. Whoever having been previously convicted of an offence punishable underthis Chapter, except the offence under section 26, is subsequently convicted of an offenceshall be punishable with imprisonment for a term which shall not be less than five yearsbut which may extend to ten years and with fine which shall not be less than ten lakhrupees but which may extend to fifty crore rupees.

25. (1) Where an offence under this Act has been committed by a deposit takerother than an individual, every person who, at the time the offence was committed, wasin charge of, and was responsible to, the deposit taker for the conduct of its business, aswell as the deposit taker, shall be deemed to be guilty of the offence and shall be liableto be proceeded against and punished accordingly.

(2) Nothing contained in sub-section (1) shall render any such person liable to anypunishment provided in this Act, if he proves that the offence was committed withouthis knowledge or that he exercised all due diligence to prevent the commission of suchoffence.

(3) Notwithstanding anything contained in sub-section (1), where an offence underthis Act has been committed by a deposit taker other than an individual, and it is provedthat the offence—

(a) has been committed with the consent or connivance of; or

(b) is attributable to any neglect on the part of any director, manager, secretary,promoter, partner, employee or other officer of the deposit taker,

such person shall also be deemed to be guilty of that offence and shall be liable to beproceeded against and punished accordingly.

26. Whoever fails to give the intimation required under sub-section (1) ofsection 10 or fails to furnish any such statements, information or particulars as requiredunder sub-section (2) of that section, shall be punishable with fine which may extend tofive lakh rupees.

27. Notwithstanding anything contained in section 4, no Designated Court shalltake cognizance of an offence punishable under that section except upon a complaintmade by the Regulator:

Provided that the provisions of section 4 and this section shall not apply in relationto a deposit taker which is a company.

CHAPTER VII

INVESTIGATION, SEARCH AND SEIZURE

28. Notwithstanding anything contained in the Code of Criminal Procedure, 1973every offence punishable under this Act, except the offence under section 22 andsection 26, shall be cognizable and non-bailable.

29. The police officer shall, on recording information about the commission of anoffence under this Act, inform the same to the Competent Authority.

2 of 1974. Offences to becognizable andnon-bailable.

CompetentAuthority tobe informedof offences.

Cognizance ofoffences.

Punishmentforcontraventionof section 10.

Offences bydeposit takersother thanindividuals.

Punishmentfor repeatoffenders.

Punishmentforcontraventionof section 5.

Punishmentforcontraventionof section 4.

12 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

30. (1) On receipt of information under section 29 or otherwise, if the CompetentAuthority has reason to believe that the offence relates to a deposit scheme or depositschemes in which—

(a) the depositors, deposit takers or properties involved are located in morethan one State or Union territory in India or outside India; and

(b) the total value of the amount involved is of such magnitude as to significantlyaffect the public interest,

the Competent Authority shall refer the matter to the Central Government for investigationby the Central Bureau of Investigation.

(2) The reference made by the Competent Authority under sub-section (1) shall bedeemed to be with the consent of the State Government under section 6 of the Delhi SpecialPolice Establishment Act, 1946.

(3) On the receipt of the reference under sub-section (1), the Central Government maytransfer the investigation of the offence to the Central Bureau of Investigation undersection 5 of the Delhi Special Police Establishment Act, 1946.

31. (1) Whenever any police officer, not below the rank of an officer in-charge of apolice station, has reason to believe that anything necessary for the purpose of aninvestigation into any offence under this Act may be found in any place within the limits ofthe police station of which he is in-charge, or to which he is attached, such officer may, withthe written authorisation of an officer not below the rank of Superintendent of Police, andafter recording in writing so far as possible, the thing for which the search is to be made andsubject to the rules made in this behalf, authorise any officer subordinate to him,—

(a) to enter and search any building, conveyance or place, between sunriseand sunset, which he has reason to suspect is being used for purposes connectedwith the promotion or conduct of any deposit taking scheme or arrangement incontravention of the provisions of this Act;

(b) in case of resistance, to break open any door and remove any obstacle tosuch entry, if necessary by force, with such assistance as he considers necessary, forexercising the powers conferred by clause (a);

(c) to seize any record or property found as a result of the search in the saidbuilding, conveyance or place, which are intended to be used, or reasonably suspectedto have been used, in connection with any such deposit taking scheme or arrangementin contravention of the provisions of this Act; and

(d) to detain and search, and if he thinks proper, take into custody and producebefore any Designated Court any such person whom he has reason to believe tohave committed any offence punishable under this Act:

Provided that if such officer has reason to believe that the said writtenauthorisation cannot be obtained without affording opportunity for the concealmentof evidence or facility for the escape of an offender, he may, without the said writtenauthorisation, enter and search such building, conveyance or place, at any timebetween sunset and sunrise after recording the grounds in writing.

(2) Where it is not practicable to seize the record or property, the officer authorisedunder sub-section (1), may make an order in writing to freeze such property, account,deposits or valuable securities maintained by any deposit taker about which a complainthas been made or credible information has been received or a reasonable suspicion existsof their having been connected with the promotion or conduct of any deposit taking schemeor arrangement in contravention of the provisions of this Act and it shall be binding on theconcerned bank or financial or market establishment to comply with the said order:

Investigationof offences byCentral BureauofInvestigation.

Power toenter, searchand seizewithoutwarrant.

25 of 1946.

25 of 1946.

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 13

Provided that no bank or financial or market establishment shall freeze such account,deposit or valuable securities, for a period beyond thirty days unless the same is authorisedby the order of the Designated Court:

Provided further that, if at any time, it becomes practicable to seize the frozenproperty, the officer authorised under sub-section (1) may seize such property.

Explanation.—For the purposes of this section, the expressions,—

(i) “freezing of account” shall mean that no transaction, whether deposit orwithdrawal shall be allowed in the said account; and

(ii) “freezing of property” shall mean that no transfer, conversion, dispositionor movement of property shall be allowed.

(3) Where an officer takes down any information in writing or records grounds forhis belief or makes an order in writing under sub-section (1) or sub-section (2), he shall,within a time of seventy-two hours send a copy thereof to the Designated Court in asealed envelope and the owner or occupier of the building, conveyance or place shall,on application, be furnished, free of cost, with a copy of the same by the DesignatedCourt.

(4) All searches, seizures and arrests under this section shall be made in accordancewith the provisions of the Code of Criminal Procedure, 1973.

32. (1) The Designated Court may take cognizance of offences under this Actwithout the accused being committed to it for trial.

(2) Save as otherwise provided in section 31, the provisions of the Code of CriminalProcedure, 1973 shall apply—

(a) to all arrests, searches and seizures made under this Act;

(b) to the proceedings under this Act and for the purposes of the saidprovisions, the Designated Court shall be deemed to be a Court of Session and thepersons conducting the prosecution before the Designated Court, shall be deemedto be Public Prosecutors.

CHAPTER VIII

MISCELLANEOUS

33. Where any newspaper or other publication of any nature, contains anystatement, information or advertisement promoting, soliciting deposits for, or inducingany person to become a member of any Unregulated Deposit Scheme, the appropriateGovernment may direct such newspaper or publication to publish a full and fair retraction,free of cost, in the same manner and in the same position in such newspaper or publicationas may be prescribed.

34. Save as otherwise expressly provided in this Act, the provisions of this Actshall have effect notwithstanding anything contained in any other law for the time beingin force, including any law made by any State or Union territory.

35. The provisions of this Act shall be in addition to, and not in derogation of, theprovisions of any other law for the time being in force.

36. No suit, prosecution or other legal proceedings shall lie against the appropriateGovernment or the Competent Authority or any officer of the appropriate Governmentfor anything which is in good faith done or intended to be done under this Act or therules made thereunder.

37. (1) The Central Government may, by notification, make rules for carrying outthe provisions of this Act.

Application ofCode ofCriminalProcedure,1973 toproceedingsbeforeDesignatedCourt.

Publication ofadvertisementof UnregulatedDepositScheme.

Act to haveoverridingeffect.

Application ofother laws notbarred.

Protection ofaction takenin good faith.

Power ofCentralGovernmentto make rules.

2 of 1974.

2 of 1974.

14 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

(2) In particular and without prejudice to the generality of the foregoing power, suchrules may provide for all or any of the following matters, namely:—

(a) the information and other particulars to be taken into consideration beforeissuing an order, and the manner of attachment, under sub-section (3) of section 7;

(b) the information to be shared under sub-section (2) of section 9;

(c) the form and manner in which and the time within which the intimation shallbe given under sub-section (1) of section 10;

(d) the particulars contained in the application to be filed by the CompetentAuthority before the Designated Court under sub-section (1) of section 14;

(e) the procedure to be adopted by the Designated Court before issuing anorder under sub-section (3) of section 15;

(f) rules under sub-section (1) of section 31;

(g) the manner of publication of advertisement under section 33; and

(h) any other matter which is required to be, or may be, prescribed.

38. (1) The State Government or Union territory Government, as the case may be, inconsultation with the Central Government, by notification, make rules for carrying out theprovisions of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, suchrules may provide for all or any of the following matters, namely:—

(a) ceiling for self-help groups under clause (j) of sub-section (4) of section 2;

(b) purpose and ceiling under clause (k) of sub-section (4) of section 2;

(c) the manner of provisional attachment of property by the Competent Authorityunder sub-section (3) of section 7;

(d) other matters under clause (f) of sub-section (4) of section 7;

(e) the rules relating to impounding and custody of records undersub-section (8) of section 7; and

(f) any other matter which is required to be, or may be, prescribed.

39. (1) Every rule made by the Central Government under this Act shall be laid, assoon as may be after it is made, before each House of Parliament, while it is in session, fora total period of thirty days which may be comprised in one session, or in two or moresuccessive sessions, and if, before the expiry of the session immediately following thesession or the successive sessions aforesaid, both Houses agree in making any modificationin the rule, or both Houses agree that the rule should not be made, the rule shall thereafterhave effect only in such modified form or be of no effect, as the case may be; so, however,that any such modification or annulment shall be without prejudice to the validity of anythingpreviously done under that rule.

(2) Every rule made by a State Government or the Union territory Government, as thecase may be, shall be laid, as soon as may be after it is made, before each House of the StateLegislature or the Union territory Legislature, as the case may be, where it consists of twoHouses, or where such Legislature consists of one House, before that House.

40. (1) The Central Government may, having regard to the objects of this Act, and ifit considers necessary or expedient so to do, by notification, add to, or as the case may be,omit from the First Schedule, any scheme or arrangement, and on such addition, or omission,such scheme or arrangement shall become, or cease to be, a Regulated Deposit Scheme, asthe case may be.

(2) A copy of every notification issued under this section shall, as soon as may beafter it has been issued, be laid before each House of Parliament.

Power of StateGovernment,etc., to makerules.

Laying ofrules.

Power toamend FirstSchedule.

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 15

41. The provisions of this Act shall not apply to deposits taken in the ordinarycourse of business.

42. The enactments specified in the Second Schedule shall be amended in the mannerspecified therein.

43. (1) If any difficulty arises in giving effect to the provisions of this Act, the CentralGovernment may, by order published in the Official Gazette, make such provisions, notinconsistent with the provisions of this Act, as may appear to it to be necessary for removingthe difficulty:

Provided that no such order shall be made under this section after the expiry of threeyears from the commencement of this Act.

(2) Every order made under this section shall be laid, as soon as may be after it ismade, before each House of Parliament.

44. (1) The Banning of Unregulated Deposit Schemes Ordinance, 2019, is herebyrepealed.

(2) Notwithstanding such repeal, anything done or any action taken under the saidOrdinance, shall be deemed to have been done or taken under this Act.

Act not toapply certaindeposits.Amendmentto certainenactments.

Repeal andsaving.

Ord. 7 of2019.

Power toremovedifficulties.

16 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

THE FIRST SCHEDULE

[See section 2 (15)]

REGULATED DEPOSIT SCHEMES

(1) The Regulator and Regulated Deposit Scheme refers to the regulators andschemes and arrangements listed in the following Table, namely:—

TABLE

Sl. No. Regulator Regulated Deposit Scheme

(1) (2) (3)

1. The Securities and (i) Any scheme or an arrangement [as defined underExchange Board section 11AA of the Securities and Exchange Board ofof India India Act, 1992 (15 of 1992)] launched, sponsored or

carried out by a Collective Investment ManagementCompany registered with the Securities and ExchangeBoard of India under the Securities and Exchange Boardof India (Collective Investment Scheme) Regulations,1999.

(ii) Any scheme or an arrangement registered with theSecurities and Exchange Board of India under theSecurities and Exchange Board of India (AlternativeInvestment Funds) Regulations, 2012.

(iii) Any scheme or an arrangement, pursuant to whichfunds are managed by a portfolio manager, registeredunder the Securities and Exchange Board of India(Portfolio Managers) Regulations, 1993.

(iv) Any scheme or an arrangement regulated under theSecurities and Exchange Board of India (Share BasedEmployee Benefits) Regulations, 2014 or providing foremployee benefits as permitted under the CompaniesAct, 2013 (18 of 2013).

(v) Any other scheme or an arrangement registeredunder the Securities and Exchange Board of India Act,1992 (15 of 1992), or the regulations made thereunder.

(vi) Any amount received as contributions in the natureof subscriptions to a mutual fund registered withSecurities and Exchange Board of India under theSecurities and Exchange Board of India (Mutual Funds)Regulations, 1996.

2. The Reserve Bank of (i) Any scheme under which deposits are accepted byIndia Non-Banking Financial Companies as defined in clause

(f) of section 45-I of the Reserve Bank of India Act, 1934(2 of 1934) and registered with the Reserve Bank ofIndia; or any other scheme or an arrangement registeredunder the Reserve Bank of India Act, 1934.

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 17

(ii) Any scheme or an arrangement under which fundsare accepted by individuals or entities engaged asBusiness Correspondents and Facilitators by bankssubject to the guidelines and circulars issued by theReserve Bank of India from time to time.

(iii) Any scheme or an arrangement under which fundsare received by a system provider operating as anauthorised payment system under the Payment andSettlement Systems Act, 2007 (51 of 2007).

(iv) Any other scheme or an arrangement regulatedunder the Reserve Bank of India Act, 1934 (2 of 1934),or the guidelines or circulars of the Reserve Bank ofIndia.

3. The Insurance A contract of insurance pursuant to a certificate ofRegulatory and registration obtained in accordance with the InsuranceDevelopment Act, 1938 (4 of 1938).Authority of India

4. The State Government (i) Any scheme or an arrangement made or offered by aor Union territory co-operative society registered under the Co-operativeGovernment Societies Act, 1912 (2 of 1912) or a society being a

society registered or deemed to be registered underany law relating to co-operative societies for the timebeing in force in any State or Union territory.

(ii) Any scheme or an arrangement commenced orconducted as a chit business with the previous sanctionof the State Government in accordance with theprovisions of the Chit Funds Act, 1982 (40 of 1982).

(iii) Any scheme or an arrangement regulated by anyenactment relating to money lending which is for thetime being in force in any State or Union territory.

(iv) Any scheme or an arrangement by a prize chit ormoney circulation scheme under section 11 of the PrizeChits and Money Circulation Schemes (Banning)Act, 1978 (43 of 1978).

5. The National Any scheme or an arrangement for acceptance ofHousing Bank deposits registered under the National Housing Bank

Act, 1987 (53 of 1987).

6. The Pension Fund Any scheme or an arrangement under the Pension FundRegulatory and Regulatory and Development Authority Act, 2013Development (23 of 2013).Authority

7. The Employees' Any scheme, Pension Scheme or Insurance SchemeProvident Fund framed under the Employees' Provident Fund andOrganisation Miscellaneous Provisions Act, 1952 ( 19 of 1952).

8. The Central Registrar, Any scheme or an arrangement for acceptance ofMulti-State Co- deposits from voting members by a Multi-Stateoperative Societies Co-operative Society registered under the Multi-State

Co-operative Societies Act, 2002 (39 of 2002).

(1) (2) (3)

18 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—

9. The Ministry of (i) Deposits accepted or permitted under the provisionsCorporate Affairs, of Chapter V of the Companies Act, 2013 (18 of 2013).Government of India

(ii) Any scheme or an arrangement under which depositsare accepted by a company declared as a Nidhi or aMutual Benefit Society under section 406 of theCompanies Act, 2013 (18 of 2013).

(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 anyregulatory body in India constituted or established under a statute; and

(b) any other scheme as may be notified by the Central Government under thisAct.

(1) (2) (3)

SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 19

THE SECOND SCHEDULE

(See section 42)

AMENDMENTS TO CERTAIN ENACTMENTS

PART I

AMENDMENT TO THE RESERVE BANK OF INDIA

ACT, 1934

In the Reserve Bank of India Act, 1934, in section 45-I, in clause (bb), afterExplanation II, the following Explanation shall be inserted, namely:—

"Explanation III.—The amounts accepted by a co-operative society from themembers or shareholders, by whatever name called, but excluding the amounts receivedas share capital, shall be deemed to be deposits for the purposes of this clause, if suchmembers or shareholders are nominal or associate members, by whatever name called,who do not have full voting rights in the meetings of such co-operative society.".

PART II

AMENDMENTS TO THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

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 besubstituted, namely:—

"(e) attach, for a period not exceeding ninety days, bank accounts orother property of any intermediary or any person associated with the securitiesmarket 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, establishedunder section 26A, having jurisdiction and on such confirmation, such attachmentshall continue during the pendency of the aforesaid proceedings and onconclusion of the said proceedings, the provisions of section 28A shall apply:

Provided further that only property, bank account or accounts or anytransaction entered therein, so far as it relates to the proceeds actually involvedin violation of any of the provisions of this Act, or the rules or the regulationsmade thereunder shall be allowed to be attached.";

(ii) in section 28A, after Explanation 3, the following Explanation shall beinserted, namely:—

"Explanation 4.—The interest referred to in section 220 of the Income-taxAct, 1961 shall commence from the date the amount became payable by theperson.".

PART III

AMENDMENT TO THE MULTI-STATE CO-OPERATIVE SOCIETIES ACT, 2002

In the Multi-State Co-operative Societies Act, 2002, in section 67, in sub-section (1),—

(a) after the words "receive deposits", the words "from its voting members"shall be inserted;

Amendment ofsection 45-I ofAct 2 of 1934.

Amendmentof section 11of Act 15 of1992.

43 of 1961.

Amendmentof section 67of Act 39 of2002.

(b) the following Explanation shall be inserted, namely:—

"Explanation.—For the removal of doubts, it is hereby clarified that amulti-State co-operative society shall not be entitled to receive deposits frompersons other than voting members.".

————

DR. G. NARAYANA RAJU,Secretary to the Govt. of India.

MGIPMRND—2273GI(S3)—31-07-2019.

PRINTED BY THE MANAGER, GOVERNMENT OF INDIA PRESS, MINTO ROAD, NEW DELHI–110002AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI–110054.

20 THE GAZETTE OF INDIA EXTRAORDINARY [PART II— SEC. 1]

854 GI/2020 (1)

रजजस्ट्री स.ं डी.एल.- 33004/99 REGD. NO. D. L.-33004/99

xxxGIDHxxx xxxGIDExxx

असाधारण

EXTRAORDINARY

भाग II—खण् ड 3—उप-खण् ड (ii)

PART II—Section 3—Sub-section (ii)

प्राजधकार स ेप्रकाजित

PUBLISHED BY AUTHORITY

जित्त मतं्रालय

(जित्तीय सिेा जिभाग)

अजधसचूना

नई ददल् ली, 12 फरिरी, 2020

का.आ.663(अ).—कें द्रीय सरकार, अजिजनयजमत जनक्षपे स्ट्कीम पाबंदी अजधजनयम, 2019 (2019 का 21)

की धारा 37 द्वारा प्रदत्त िजियों का प्रयोग करत ेहुए, जनम्नजलजखत जनयम बनाती ह,ै अथाात ्:--

1. सजंक्षप्त नाम और प्रारंभ—(1) इन जनयमों का संजक्षप्त नाम अजिजनयजमत जनक्षेप स्ट्कीम पाबंदी जनयम, 2020 ह ै।

(2) य ेजनयम, राजपत्र में उनके प्रकािन की तारीख को प्रिृत्त होंगे ।

2. पररभाषाए—ं(1) इन जनयमों में, जब तक संदभा से अन्यथा अपेजक्षत न हो,--

(क) “अजधजनयम” से अजिजनयजमत जनक्षेप स्ट्कीम पाबंदी अजधजनयम, 2019 (2019 का 21) अजभप्रते ह ै;

(ख) “आिेदन” से अजधजनयम की धारा 14 के अधीन सक्षम प्राजधकारी द्वारा फाइल दकया गया कोई

आिेदन अजभप्रेत ह ै;

(ग) “प्राजधकारी” से अजधजनयम की धारा 9 के अधीन अजभजहत कोई प्राजधकारी अजभप्रते ह ै;

स.ं 604] नई ददल्ली, बधुिार, फरिरी 12, 2020/माघ 23, 1941

No. 604] NEW DELHI, WEDNESDAY, FEBRUARY 12, 2020/MAGHA 23, 1941

सी.जी.-डी.एल.-अ.-13022020-216125CG-DL-E-13022020-216125

2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]

(घ) “सक्षम प्राजधकारी” से अजधजनयम की धारा 7 के अधीन समुजचत सरकार द्वारा जनयुि कोई

प्राजधकारी अजभप्रेत ह ै; और

(ङ) “अजभजहत न्यायालय” से अजधजनयम की धारा 8 के अधीन समुजचत सरकार द्वारा गरित कोई

अजभजहत न्यायालय अजभप्रेत ह ै।

(2) उन िब्दों और पदों के, जो इसमें प्रयुि हैं और पररभाजषत नहीं ह,ै ककतु अजधजनयम में पररभाजषत ह,ै

िही अथा होंग,े जो उनके उस अजधजनयम में ह ै।

3. जिचार दकए जान ेिाली सचूना और जिजिजिया—ंऐसी सूचना और जिजिजियों में, जजन पर सक्षम प्राजधकारी,

जनक्षेप लेन ेिाल ेकी संपजत्त को अनजन्तम रूप से कुका करन े के जलए जिचार करेगा, जनम्नजलजखत सजममजलत होगा,

अथाात ्:--

(क) अजिजनयजमत जनक्षेप स्ट्कीम के संिधान या प्रचालन के जिरुद्ध कोई ऐसी जिकायत दक क्या

जिकायतकताा, उि अजिजनयजमत जनक्षेप संपजत्त में जनक्षेपकताा ह ैया नहीं ;

(ख) अजिजनयजमत जनक्षेप स्ट्कीम के संिधान या प्रिधान के संबंध में कें द्रीय सरकार या दकन्हीं राज्य सरकारों

या संघ राज्यक्षेत्र प्रिासनों या ऐसी सरकारों के प्रभार के अधीन दकसी जिजध प्रितान प्राजधकारी या

अजभकरण या जनकाय से प्राप्त कोई सूचना ;

(ग) दकसी जिज्ञापन की सूचना, चाह ेमुदद्रत हो या इलैक्राजनक मीजडया िाली या दोनों, जजसके अंतगात

दकसी अजिजनयजमत जनक्षेप स्ट्कीम जिजनधान करने िाला या उसका सदस्ट्य या भागीदार कोई अन्य

व्यजि भी ह ै; और

(घ) कोई ऐसी अन्य सूचना, जो सक्षम प्राजधकारी के पास ह ैदक जनक्षेप लेन ेिाल ेन ेअजधजनयम के उपबंधों

के उल्लंघन में जनक्षेपों की याचना की ह ैया उन्हें स्ट्िीकार दकया ह ै।

4. अनजन्तम कुकी की रीजत और अनजन्तम रूप स ेकुका सपंजत्त का प्रिासन— (1) अनजन्तम कुकी के आदिे की प्रजत की

तामील संपजत्त के स्ट्िामी या दकसी ऐसे व्यजि पर की जाएगी, जजसने संपजत्त पर काजबज होने का दािा दकया ह ैया

दकसी अन्य ऐसे व्यजि पर की जाएगी, जजसका उि संपजत्त में कोई जहत ह ै।

(2) अनजन्तम कुकी का आदेि ऐसे क्षेत्र या अजधकाररता में, जजसमें जनक्षेप लेने िाला अिजस्ट्थत ह,ै व्यापक रूप

से पररचाजलत प्रमुख समाचार पत्र में (देिी और अगं्रेजी दोनों भाषाओं में) प्रकाजित दकया जाएगा ।

(3) जहां सक्षम प्राजधकारी, उपजनयम (1) में जिजनर्ददि दकसी व्यजि को अनजन्तम कुकी के आदेि की तामील

करने में समथा नहीं होता ह,ै िहां उपजनयम (2) के अधीन उपबंजधत रीजत में आदेि के प्रकािन द्वारा आदेि की

तामील समझी जाएगी ।

(4) सक्षम प्राजधकारी, ऐसी स्ट्थािर संपजत्त के सहजदशृ्य स्ट्थान पर अनजन्तम कुकी के आदिे को जचपकाकर

स्ट्थािर संपजत्त का कब्जा लगेा ।

(5) जहां कुका की जान ेिाली संपजत्त कोई जंगम संपजत्त ह,ै िहां सक्षम प्राजधकारी ऐसी संपजत्त का िास्ट्तजिक

कब्जा लगेा और उसे अपनी अजभरक्षा में या उसकी सहायता के जलए जनयुि दकसी अन्य अजधकारी की अजभरक्षा में

प्रजतधाररत करेगा ।

(6) सक्षम प्राजधकारी, अनजन्तम रूप से कुका संपजत्त के अजभलखे का अनरुक्षण करेगा, जजसमें संपजत्त के प्रबंध से

उपगत दकसी व्यय या उसकी लागत के ब्यौरे और संपजत्त से प्राप्त दकसी आय के ब्यौरे सजममजलत होंग े।

[भाग II—खण् ड 3(ii)] भारत का राजपत्र : असाधारण 3

(7) सक्षम प्राजधकारी, जनक्षेप लेन ेिाल ेकी आजस्ट्तयों और दाजयत्िों का जनधाारण करेगा और ऐसे जनक्षेपकतााओं

के, जजनसे जनक्षेप लनेे िान ेन ेअजिजनयजमत जनक्षेप स्ट्कीम के अनुसरण में जनक्षेपों का संग्रहण दकया है, संपूणा अजभलेख

को तैयार करेगा ।

(8) सक्षम प्राजधकारी, उपजनयम (7) के अधीन जनक्षेप लनेे िाले की आजस्ट्तयों और दाजयत्िों के जनधाारण के

प्रयोजनों के जलए मूल्यांकक की जनयुजि कर सकेगा ।

(9) जहां कोई ऐसी संपजत्त, जजसका कब्जा जलया गया ह,ै जिनश्वर प्रकृजत की ह,ै िहां सक्षम प्राजधकारी

जनक्षेपकतााओं के उत्तम जहत को ध्यान में रखत ेहुए उसका जिक्रय कर सकेगा ।

(10) सक्षम प्राजधकारी द्वारा, उपजनयम (9) के अधीन जिक्रय के ब्यौरे और आगमों को उपजनयम (6) में यथा

जिजनर्ददि अजभलेख में पथृक् रूप से प्रजिि और अनरुजक्षत दकया जाएगा ।

5. अजभलखेों का पररबद्धकरण और प्रजतधारण—(1) ऐसा व्यजि, जजसकी अजभरक्षा से अजधजनयम की धारा 7 की

उपधारा (8) के अधीन अजभलेख पररबद्ध दकए गए हैं, सक्षम प्राजधकारी द्वारा प्राजधकृत दकसी अजधकारी की

उपजस्ट्थजत में ऐसे स्ट्थान और समय पर, जो सक्षम प्राजधकारी इस जनजमत्त जनयत करे, उसकी प्रजतयां बना सकेगा या

उससे उद्धरण ले सकेगा ।

(2) धारा 7 की उपधारा (2) के अधीन जनयिु अजधकारी, ऐसे अजभलेख को, सक्षम प्राजधकारी से अनुमोदन

जलए जबना तीन मास तक की अिजध के जलए अपनी अजभरक्षा में रखेगा और यदद अजभलेख को उि अिजध के पश्चात्

अिधाररत करना आिश्यक ह ैतो सक्षम प्राजधकारी का अनुमोदन अपेजक्षत होगा ।

(3) यदद कोई व्यजि, जजसकी अजभरक्षा से अजभलेख पररबद्ध दकए गए हैं, अजभलेखों के पररबद्ध दकए जाने के

दकसी कारण को आक्षेजपत करता ह ैतो िह सक्षम प्राजधकारी को ऐसे आक्षेप के कारणों को बताते हुए एक आिेदन कर

सकेगा और सक्षम प्राजधकारी, आिेदक को सुनिाई का अिसर ददए जान ेके पश्चात् ऐसा आदेि पाररत कर सकेगा,

जैसा िह िीक समझे ।

(4) अजधकारी पररबद्ध दकए गए अजभलेखों की सुरजक्षत अजभरक्षा सुजनजश्चत करेगा और उसकी अजभरक्षा

प्रजतधाररत करेगा ।

6. कें द्रीय डाटाबसे—(1) प्राजधकारी, दकसी जिजनयामक या सक्षम प्राजधकारी या दकसी अन्य इकाई या व्यजि से,

भारत में जनक्षेप लेन ेिालों से संबंजधत उसके कब्जे में की सूचना प्रस्ट्ततु करने की अपेक्षा कर सकेगा ।

(2) अजभजहत प्राजधकारी, जनक्षेप लेन ेिालों से संबंजधत सूचना अतंर्विि करत ेहुए, जनसाधारण के पहुचं योग्य

एक पोटाल का प्रचालन करेगा, जजसमें जनम्नजलजखत सजममजलत होगा, अथाात ्:--

(i) भारत में प्रचालन करने िाल ेजनक्षेप लेन ेिालों की सूची, उनके प्रचालन का जिस्ट्तार और क्षते्र ;

(ii) जनक्षेपों के संग्रहण के जलए दकसी जनक्षेप लनेे िालों के जिरुद्ध तत्समय प्रिृत्त दकसी जिजध के अधीन की

गई कोई कारािाई ; और

(iii) अजधजनयम के अध्याय 5 के अधीन जनक्षेपकतााओं को िापस दकए जाने संबंधी कायािाजहयों से संबंजधत

निीनतम जानकारी ।

7. प्रज्ञापना का प्ररूप और रीजत—(1) कारबार प्रारंभ करन ेिाला प्रत्येक जनक्षपे लने ेिाला, कारबार के प्रारंभ से तीस

ददन की अिजध के भीतर जनयम 6 के उपजनयम (1) में जिजनर्ददि प्राजधकारी को इन जनयमों से उपाबद्ध प्ररूप में एक

सूचना प्रस्ट्तुत करेगा ।

(2) उि प्राजधकारी को प्रस्ट्तुत दकन्हीं जिजिजियों में दकसी पररितान की दिा में, जनक्षेप लेन ेिाला पररितान की

तारीख से तीस ददन की अिजध के भीतर ऐसे पररितान की सूचना प्राजधकारी को दगेा ।

4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]

8. अनजन्तम कुकी की पजुि के जलए आिदेन—सक्षम प्राजधकारी, जनम्नजलजखत जिजिजियों को समाजिि करते हुए पूणा

अनजन्तम कुकी करन ेके जलए अजभजहत नयायालय के समक्ष आिेदन फाइल करेगा, अथाात् :--

(क) कुका की गई संपजत्त, धनराजि या जनक्षेपों की परूी सूची ;

(ख) स्ट्थािर संपजत्त की दिा में, संपजत्त का स्ट्िामी/के स्ट्िाजमयों, दकसी व्यजि, जो संपजत्त में काजबज होन े

का दािा करता ह ैऔर दकसी अन्य व्यजि, जजसका उि संपजत्त में कोई जहत ह,ै का/के नाम और ब्यौरे;

(ग) जनयम 4 के उपजनयम (6) में जिजनर्ददि अनजन्तम रूप से कुका की गई संपजत्त और जनयम 4 के उपजनयम

(8) में जिजनर्ददि मूल्यांकन ररपोटा, यदद कोई हो, का अजभलेख ;

(घ) जनक्षेपकतााओं की सूची, जजनसे जनक्षेप लेन ेिाले ने जनक्षपेों का प्रजतग्रहण या संग्रहण दकया ह ै; और

(ङ) जनक्षेपकतााओं को देय िोध्यों की सूची, जजसके अंतगात ऐसी रकम भी ह,ै जो जनक्षेप लने ेिाल ेकी कुका

संपजत्त के जिक्रय से िूसल की जा सकेगी ।

9. अजभजहत न्यायालय द्वारा अगंीकृत की जान े िाली प्रदक्रया—(1) अजभजहत न्यायालय, अपनी स्ट्ियं की प्रदक्रया

जिजनयजमत कर सकेगा और नसैर्वगक न्याय के जसद्धांतों और जसजिल प्रदक्रया संजहता, 1908 में अंतर्विि प्रदक्रया द्वारा

मागादर्वित होगा ।

(2) अजभजहत न्यायालय,--

(क) अजधजनयम की धारा 15 की उपधारा (1) या उपधारा (2) के अधीन जारी कारण बताओ सूचना के

आक्षेपों पर जिचार करेगा ;

(ख) व्यजथत व्यजि और सक्षम प्राजधकारी या इन पक्षकारों का प्रजतजनजधत्ि करने िाले अजधििाओं की

सुनिाई करेगा ; और

(ग) उसके समक्ष अजभलेख पर रखी गई सभी सुसंगत सामजग्रयों पर जिचार करेगा ।

10. तलािी और अजभग्रहण का प्राजधकार—इस अजधजनयम के अधीन दकसी अपराध में अन्िेषण के प्रयोजन के जलए,

पुजलस थान ेका भारसाधक अजधकारी जनम्नजलजखत की तलािी के जलए जलजखत प्राजधकार द ेसकेगा, अथाात ्:--

(क) कोई अजभलेख, चाह ेभौजतक हो या इलैक्राजनक, जजसका अजिजनयजमत जनक्षेप स्ट्कीम के संिधान या

प्रचालन के संबंध में उपयोग दकया जाता है, उपयोग दकया जाना आिजयत ह ैया उपयोग दकए जान े

का संदेह ह ै;

(ख) अजिजनयजमत जनक्षेप स्ट्कीम के संबंध में अनुरजक्षत कोई लेखा पजुस्ट्तका ;

(ग) अजिजनयजमत जनक्षेप स्ट्कीम के संिधान या प्रचालन के संबंध में अर्वजत दकया गया या अर्वजत दकए जान े

के जलए आिंदकत कोई जनक्षेप ;

(घ) दकसी अजिजनयजमत जनक्षेप स्ट्कीम के संिधान या प्रचालन के संबंध में अनरुजक्षत दकया गया या

अनुरजक्षत दकए जान ेके जलए आिंदकत कोई जनक्षेप ;

(ङ) दकसी संपजत्त, चाह ेजंगम हो या स्ट्थािर, का अजभलेख जनक्षेप लनेे िाले के नाम में या जनक्षेप लनेे िाल े

की ओर से दकसी अन्य व्यजि के नाम में अर्वजत की गई हो, जजसके अजिजनयजमत जनक्षेप स्ट्कीम के

संबंध में अजान दकए जान ेकी आिंका हो ;

(च) दकसी बैंक या जित्तीय या बाजार स्ट्थापन के दकसी खाते का अजभलेख, जजसके अजिजनयजमत जनक्षेप

स्ट्कीम के संबंध में उपयोग दकए जाने की आिंका हो ; और

[भाग II—खण् ड 3(ii)] भारत का राजपत्र : असाधारण 5

(छ) कोई अन्य बात, जजसका अजिजनयजमत जनक्षेप स्ट्कीम के संबंध में उपयोग दकए जाने की आिंका हो ।

11. जिज्ञापन का जनबधंन—(1) समुजचत सरकार, दकसी समाचार पत्र या दकसी भी प्रकृजत के अन्य प्रकािन के स्ट्िामी

को, चाह ेमुदद्रत हो या इलैक्राजनक, दकसी अजिजनयजमत जनक्षेप स्ट्कीम को, पूणा और उजचत िापस जलए जाने, उसके

दकसी प्रस्ट्ताि को सुस्ट्पि िापस जलए जाने, दकसी जिज्ञापन में पहले दकए गए संिधान या प्रलोभन को, उसका सदस्ट्य

बनने के जलए दकसी व्यजि के जलए कथन या सूचना के प्रकािन का जनदेि देगा ।

(2) िापस जलया जाना, मूल जिज्ञापन, कथन या सूचना के समान सुस्ट्पि होगा और ऐसे रूप जिधान और फौन्ट

में होगा, जजसे दकसी पािक या प्राजप्तकताा का ध्यान तुरंत उस ओर आकृि हो जाए ।

(3) िापस जलया जाना, समुजचत सरकार के जनदिे की तारीख से दो ददन के भीतर जन:िलु्क प्रकाजित दकया

जाएगा ।

(4) यदद समुजचत सरकार का यह जिचार ह ैदक प्रकाजित दकया गया िापस जलया जाना, समाचार पत्र या ऐसे

अन्य प्रकािन के पािको का ध्यान पयााप्त रूप से आकृि नहीं कर पा रहा ह ैतो सरकार, िापस जलए जाने के पुन:

प्रकािन का जनदिे द ेसकेगी ।

[फा. सं. 6/7/2019-बीओ. II]

डॉ. मदनेि कुमार जमश्र, संयुि सजचि

प्ररूप

(जनयम 7 देजखए)

प्राजधकारी को प्रस्ट्ततु की जान ेिाली जिजिजिया ं

1. जनक्षेप लेन ेिाले का नाम

2. जनक्षेप लेन ेिाले का रजजस्ट्रीकृत पता

3. जनक्षेप लेन ेिाले की िाखाओं का पता (यदद कोई हो)

4. लाग ूजिजध के अधीन रजजस्ट्रीकरण/जनगमन की जिजिि पहचान सं.

5. जनक्षेप लेन ेिाला प्राजधकारी

6. जनक्षेप लनेे िाले के प्रबंध के जलए उत्तरदायी व्यजियों का नाम और पता (सीईओ और

जनदेिक/भागीदार, स्ट्ित्िधारी/बोडा) :

7. जनक्षेप लेन ेिाले का स्ट्थायी खाता संख्या

मैं सत्यजनष्ठा से प्रजतज्ञान करता ह ंदक इस प्ररूप में दी गई जानकारी मेरे सिोतम ज्ञान और जिश्वास में सही ह ैऔर

उसमें कोई बात जछपाई नहीं गई ह ै।

तारीख : ...................................

स्ट्थान : ................................... प्राजधकृत हस्ट्ताक्षरकताा

6 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]

MINISTRY OF FINANCE

(Department of Financial Services)

NOTIFICATION

New Delhi, the 12th February, 2020

S.O. 663 (E).— In exercise of the powers conferred by section 37 of the Banning of Unregulated

Deposit Schemes Act, 2019 (21 of 2019), the Central Government hereby makes the following rules, namely:-

1. Short title and commencement.–(1) These rules may be called the Banning of Unregulated Deposit

Schemes Rules, 2020.

(2) These rules shall come into force on the date of their publication in the Official Gazette.

2. Definitions.– (1) In these rules, unless the context otherwise requires,–

a) ―Act‖ means the Banning of Unregulated Deposit Schemes Act, 2019 (21 of 2019);

b) ―application‖ means an application filed by the Competent Authority under section 14 of the Act;

c) ―authority‖ means the authority designated under section 9 of the Act;

d) ―Competent Authority‖ means an authority appointed by the appropriate Government under

section 7 of the Act; and

e) ―Designated Court‖ means a Designated Court constituted by the appropriate Government under

section 8 of the Act.

(2) The words and expressions used herein and not defined but defined in the Act shall have the

meanings assigned to them in the Act.

3. Information and particulars to be considered.– The information and particulars which the

Competent Authority shall consider for provisionally attaching the property of the deposit taker shall

include, namely:–

(a) any complaint against the promotion or operation of an Unregulated Deposit Scheme, whether the

complainant is a depositor in the said Unregulated Deposit Scheme or not;

(b) any information received from the Central Government, or any State Governments or Union

territory Administrations, or any law enforcement authority or agency or body under the charge of

such Governments or Administrations, regarding the promotion or operation of an Unregulated

Deposit Scheme;

(c) information of any advertisement, whether in print or electronic media or both, inducing another

person to invest in, or become a member or participant of any Unregulated Deposit Scheme; and

(d) any other information that the Competent Authority has, that a deposit taker is soliciting or

accepting deposits in contravention of the provisions of the Act.

4. Manner of provisional attachment and administration of provisionally attached property.– (1) A

copy of the order of provisional attachment shall be served on the owner of the property, or any person

who claims to be in possession of the property or any other person who has an interest in the said

property.

(2) The order of provisional attachment shall be published in a leading newspaper (both in vernacular

and in English) having wide circulation in the area or jurisdiction in which the deposit taker is located.

(3) Where the Competent Authority is not able to serve the order of provisional attachment to a person

specified in sub-rule (1), then such person shall be deemed to be served the order by the publication of

the order in the manner provided under sub-rule (2).

(4) The Competent Authority shall take possession of the immoveable property by affixing the order of

provisional attachment at a conspicuous place of such immoveable property.

(5) Where the property to be attached is a moveable property, the Competent Authority shall take

actual physical possession of such property and retain it in his custody or the custody of any other

officer appointed to assist him.

[भाग II—खण् ड 3(ii)] भारत का राजपत्र : असाधारण 7

(6) The Competent Authority shall maintain a record of the property provisionally attached which shall

include details of any expenditure incurred or any costs of management of the property and of any

income received from the property.

(7) The Competent Authority shall assess the assets and the liabilities of the deposit taker and prepare a

complete record of depositors from whom the deposit taker has collected deposits pursuant to an

Unregulated Deposit Scheme.

(8) The Competent Authority may appoint a valuer for the purposes of assessing the assets and

liabilities of the deposit taker under sub-rule (7).

(9) Where any property of which possession has been taken is of a perishable nature, the Competent

Authority may sell the same keeping in mind the best interest of the depositors.

(10) The details and proceeds of the sale under sub-rule (9) shall be entered separately by the

Competent Authority and maintained in the record as specified in sub-rule (6).

5. Impounding and retention of records.– (1) The person from whose custody records are impounded

under sub-section (8) of section 7 of the Act may make copies thereof, or take extracts therefrom, in the

presence of an officer authorised by the Competent Authority, at such place and time as the Competent

Authority may appoint in this behalf.

(2) The officer appointed under sub-section (2) of section 7 shall retain such records in his custody

without taking approval from the Competent Authority for a period upto three months, and if the

records are necessary to be retained beyond the said period, approval of the Competent Authority shall

be required.

(3) If the person from whose custody records are impounded objects for any reason to the records being

impounded, he may make an application to the Competent Authority stating therein the reasons for

such objection and requesting for the return of the records, and the Competent Authority may, after

giving the applicant an opportunity of being heard, pass such orders as he thinks fit.

(4) The officer shall ensure the safe custody of the records impounded and retained in his custody.

6. Central Database.– (1) The authority may require any Regulator or the Competent Authority or any

other entity or person to submit to it any information in its possession relating to deposit takers in India.

(2) The designated authority shall operate a portal accessible to the public, containing information

relating to deposit takers, which shall include the following, namely:–

(i) list of deposit takers operating in India, the extent and areas of their operation;

(ii) any action taken under any law for the time being in force against any deposit taker for

collection of deposits; and

(iii) updates regarding proceedings for restitution of depositors under Chapter V of the Act.

7. Form and manner of intimation.– (1) Every deposit taker commencing business shall submit an

intimation in the Form annexed to these rules to the authority specified in sub-rule (1) of rule 6, within

a period of thirty days from the commencement of the business.

(2) In case of any change in any particulars submitted to the said authority, the deposit taker shall

intimate the authority of such change within a period of thirty days from the date of the change.

8. Application for confirmation of provisional attachment.– The Competent Authority shall file an

application before the Designated Court for making the provisional attachment absolute, containing the

following particulars, namely:–

(a) a complete list of the property, money or deposits attached;

(b) in case of immoveable property, the name or names and particulars of the owner of the property,

any person who claims to be in possession of the property, and any other person who has an

interest in the said property;

(c) the record of the provisionally attached property specified in sub-rule (6) of rule 4 and the

valuation report, if any, specified in sub-rule (8) of rule 4;

(d) a list of the depositors from whom the deposit taker has accepted or collected deposits; and

8 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]

(e) a list of dues owed to depositors including amounts that may be realised from sale of any attached

property of the deposit taker.

9. Procedure to be adopted by Designated Court.– (1) The Designated Court may regulate its own

procedure and shall be guided by the principles of natural justice and the procedure contained in the

Code of Civil Procedure, 1908.

(2) The Designated Court shall,–

(a) consider the objections to the show cause notice issued under sub-section (1) or sub-section

(2) of section 15 of the Act;

(b) hear the aggrieved person and the Competent Authority or advocates representing these

parties; and

(c) take into account all relevant materials placed on record before it.

10. Authorisation for search and seizure.– For the purpose of an investigation into any offence under the

Act, the officer-in-charge of a police station may, with the written authorisation, search for the

following, namely:–

(a) any record, whether physical or electronic, which is used, intended to be used, or suspected to

be used, in connection with the promotion or operation of an Unregulated Deposit Scheme;

(b) any books of account maintained in connection with an Unregulated Deposit Scheme;

(c) any deposits acquired or suspected to be acquired in connection with the promotion or

operation of an Unregulated Deposit Scheme;

(d) any valuable securities maintained or suspected to be maintained in connection with the

promotion or operation of an Unregulated Deposit Scheme;

(e) record of any property, whether movable or immovable, acquired either in the name of the

deposit taker or in the name of any other person on behalf of the deposit taker, which is

suspected to be acquired in connection with an Unregulated Deposit Scheme;

(f) record of any account with a bank or financial or market establishment, which is suspected to

be used in connection with an Unregulated Deposit Scheme; and

(g) any other thing which is suspected to be used in connection with an Unregulated Deposit

Scheme.

11. Retraction of advertisement.– (1) The appropriate Government shall direct the owner of any

newspaper or other publication of any nature either in print or in electronic form, to publish a full and

fair retraction, unequivocally withdrawing any offer, promotion or inducement made earlier in any

advertisement, statement or information to any person to become a member of any Unregulated

Deposit Scheme.

(2) The retraction shall be as prominent as the original advertisement, statement or information and be

in such a format and font that immediately catches the attention of any reader or recipient.

(3) The retraction shall be published free of cost within two days from the date of the direction of the

appropriate Government.

(4) Where the appropriate Government is of the view that the retraction published has not sufficiently

engaged the attention of the readers of the newspaper or such other publication, that Government may

direct re-publication of the retraction.

[F.No.6/7/2019-BO.II]

Dr. MADNESH KUMAR MISHRA, Jt. Secy.

[भाग II—खण् ड 3(ii)] भारत का राजपत्र : असाधारण 9

FORM

(See rule 7)

INTIMATION TO BE SUBMITTED TO THE AUTHORITY

1. Name of deposit taker.

2. Registered address of the deposit taker.

3. Address of branches of the deposit taker (if any).

4. Unique Identification No. of Registration / Incorporation under applicable law.

5. Authority to carry on deposit taking.

6. Name and address of persons responsible for the management of the deposit taker (CEO and Directors/

Partners, Proprietors / Board).

7. PAN number of the deposit taker.

I solemnly affirm to the best of my knowledge and belief, that the information given in this Form is correct, and

that nothing material has been concealed therefrom.

Date: Authorised Signatory

Place:

Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064

and Published by the Controller of Publications, Delhi-110054.