New Delhi, Feb 23 (KNN) The government has issued the Banning of Unregulated Deposit Schemes Ordinance, 2019 to prevent chit fund scams and protect small investors.

Two days after the Union Cabinet approved its promulgation, the ordinance, which prevents any individual or group of individuals from taking any deposit or loan from any person other than relatives, got President Ram Nath Kovind's assent.

The ordinance will help put a check on illicit deposit taking activities that dupe poor and the financially illiterate of their hard earned savings.

According to the Ordinance, “No deposit taker shall directly or indirectly promote, operate issue any advertisement soliciting participation or enrollment in or accept deposits in pursuance of an unregulated deposit scheme.”

Kovind at an event organized by EGROW Foundation said, “The Ordinance makes it absolutely necessary for everyone to register before taking a deposit and creating a central repository of all the registered entities which can take deposits. So whosoever is not registered is not a regulated entity.”

From now on there is a complete ban on unregulated deposit and anyone promoting this will be punishable, he said.

“It also says you cannot dupe anybody as an agent or even as advertisement you cannot give face to that scheme which is not regulated by any agencies,” Kovind added. 

The banning of Unregulated Deposit Schemes Bill, 2018 was tabled in Parliament on July 18, 2018, and was referred to the Standing Committee on Finance.

The committee submitted its Seventieth Report on the bill to Parliament on January 3, 2019.

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