The Banning of Unregulated Deposit Schemes Ordinance, 2019 (for brevity ‘Ordinance’) was promogulated by Honourable President of India on 21st Feb 2019. The main objective of the Ordinance is to provide for a comprehensive mechanism to ban the unregulated deposit schemes and to protect the interest of depositors and for matters connected and incidental thereto. The Banning of Unregulated Deposit Schemes Bill, 2019 was passed on 13th Feb 2019 in Lok Sabha and since the bill could not be taken up for consideration and passing in the Rajya Sabha, the President has promogulated the Ordinance in light of powers vested in him vide Article 123 of Constitution.
Report of Standing Committee on Finance:
The Standing Committee on Finance (SCF) presented its 21st Report on the subject of ‘Efficacy of Regulation of Collective Investment Schemes, Chit Funds etc’ to the Lok Sabha. The Standing Committee after meeting and considering the views of representatives of Ministry of Finance (Department of Financial Services), Ministry of Corporate Affairs, Reserve Bank of India and SEBI has submitted the above report to Lok Sabha with their recommendations. The SCF after various consultations with various officials have identified that there is either a regulatory overlap or vacuum in regulatory control, which is leading to the exploitation of hard-earned money from poor public. The key recommendations made by SCF is to strengthen the regulatory framework for unauthorised deposit taking activities.
Inter-ministerial Group:
Post the SCF report, the Government of India has constituted an Inter-Ministerial Group (IMG) for identifying the gaps in the existing regulatory framework for deposit-taking activities and to suggest administrative/legal measures, including formulation of new law, to cover all aspects of deposit taking. IMG has finalised its Report and has recommended a number of legislative and non-legislative measures, including legislation of a comprehensive central law called ‘Banning of Unregulated Deposit Schemes and Protection of Depositors Interests Bill.
Reference to Standing Committee on Finance:
Post making the report of IMG for public for comments, the Banning of Unregulated Deposits Schemes Bill, 2018 has been introduced in Lok Sabha on 18th July 18 and the same was referred to the SCF on 10th August 18 for examination and report. 4 | P a g e The SCF after consultation with various representatives of Ministry of Finance (Department of Financial Services), Ministry of Corporate Affairs, Reserve Bank of India and SEBI has submitted its report to Lok Sabha.
Introduced in Lok Sabha:
Post such report, with the changes and recommendations of SCF, the bill has been reintroduced in the Lok Sabha and has been passed.
Ordinance:
As stated earlier, since the Rajya Sabha was not seated, the Bill has been promogulated as Ordinance by the Honourable President.
