In a Gazette Notification dated 12th February, 2020 the Ministry of Finance (“Ministry”) has issued the Banning of Unregulated Deposit Schemes Rules, 2020 (“Rules”) under the provisions of the Banning of Unregulated Deposit Schemes Act, 2019 (“Act”).
The Rules have come into force on 12th February, 2020 i.e. on the date of its publication in the Official Gazette.
Key takeaways from the Rules are mentioned below :
- The Rules state that the Competent Authority will consider the followinginformation and particulars for provisionally attaching the property of the deposit taker:
- any complaint against the promotion or operation of an Unregulated Deposit Scheme, and whether the complainant is a depositor in the said Unregulated Deposit Scheme or not.
- 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.
iii. information of any advertisement, whether in print or electronic media or both, inducing any person to invest in, or become a member or participant of any Unregulated Deposit Scheme.
- 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.
- The copy of the order of provisional attachment will 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 and the said order will also be published in a leading newspaper (vernacular or English).
The Rules further lay down a detailed manner in which the provisional attachment and administration of provisionally attached property will be done by the Authority.
- Impounding and retention of records:
The person, from whose custody records are impounded under *sub-section (8) of section 7 of the Act, may make copies, or take extracts, 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.
However, if the person from whose custody records are impounded objects for any reason to the records being impounded, he can make an application to the Competent Authority stating the reasons of 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.
- The Rules mandate a central database containing information relating to deposit takers which will be made accessible to the public through a portal.
- **Deposit takerscommencing business will have to submit an intimation to the Authority in a specific format within a period of thirty days from the commencement of the business. If there is any change in any particulars submitted to the Authority, the deposit taker must intimate the authority of such change within a period of 30 days from the date of the the change.
The format is annexed with the Rules.
*Section 7 : Competent Authority : (8) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he 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.
**Section 2(6) of the Act : “deposit taker” means—
(i) any individual or group of individuals;
(ii) a proprietorship concern;
(iii) a partnership firm (whether registered or not);
(iv) a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 2009);
(v) a company;
(vi) an association of persons;
(vii) a trust (being a private trust governed under the provisions of the Indian Trusts Act, 1882 (2 of 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 soliciting deposits, but does not include— (i) a Corporation incorporated under an Act of Parliament or a State Legislature; 6 (ii) a banking company, a corresponding new bank, the State Bank of India, a subsidiary bank, a regional rural bank, a co-operative bank or a multi-State co-operative bank as defined in the Banking Regulation Act,1949 (10 of 1949);
Source: Ministry of Finance