The banging of unregulated deposit scheme bill 2019 was launched in Lok Sabha by the Minister of Finance Ms Nirmalasitharaman on July 19 2019. That bill provides for a mechanism to Ban all the under-regulated deposit schemes to protect the interest of depositors. It will also amend the three laws, I.e. the Reserve Bank of India Act, 1934, the Multi-State cooperative societies Act, 2002 and exchange Board of India Act, 1992.

This aims to tackle the illicit deposit activities and provide a comprehensive mechanism by banning the unregulated deposit schemes to save the interest of the depositor.

Deposit In that will that term deposit define as an amount of money through which advance loan or any other form with the promise to be returned with interest or some time without interest. All this kind of deposit may be returned either in kind of services or in cash, in the time of Return of these deposits may be or may not be specified.

  • Nowadays, the nine regulators oversee and regulate the various deposit-taking schemes. All these schemes are included as 1- Reserve Bank of Insche2-Security exchange board of India 3- The Ministry of Corporate Affairs in the fourth and last one is that the state and the union territory governments. Let’s take an example, the security exchange board of India regulates mutual funds. The entire relevant regulators are to be registered in deposit-taking schemes.

Unregulated Deposit Scheme: The unregulated deposit schemes Ban by the bill. It is defined as a regulation if it falls not taken for the purpose of business, and it should not be registered with the regulators with those who were listed in the bill.

Deposit taker: It should be defined as deposit takers should be considered as a group of individuals, or as an individual or a company who ask for socialist, or received deposits. Banks and other incorporated entities are not included as deposit takers.

Competent authority: This will provide an appointment to one or more government officers above the rank of secretary of state or central government as the competent authority. Police officers who receive information about the offences under this bill will report to that competent authority. if police officer search and seizure any property connected with that offence under the bill with or without warrant the competent authority may:

  • Attach the property of the deposit taken as well as deposit
  • Will summon and examine the person considered necessary for the purpose so as to obtain evidence
  • Order the production to record the evidence

Designated courts: It is a bill which provides constitution of one or more designated courts the court will be held by a judge of the rank of district and sessions judge after the provisional attachment of the depositor’s assets the competent authority mein approach to the designated court to:

  • Make the provisional attachment
  • To asking permission to sell those assets
  • To competent authority should approach the court within 30 days this should open a bank account to release the money to the depositor under the instruction of the designated court

Designated code has the power to

  • Make that provisional attachment absolute
  • Cancel the provisional attachment
  • Finalize the list of depositors and the dues
  • Can direct the competent authority to sell that property and distribute the money to the depositor

The court should complete the process within 180 days of being approached by the competent authority.

Central database: this will provide central government to authorize create an online Central database for the information on deposit takers. The competent authority will also be required to share all the information on that online Central database.

Offences and penalties; This bill has three types of offences and penalties.

Running (promoting operating accepting money

  • advertising)for a regulated deposit scheme
  • Defaulting on the regulated deposit scheme
  • Wrongfully crossing the depositor to invest in a regulated deposit scheme by giving false facts

Accepting and the regulated deposit will have the punishment of imprisonment for two to seven years with a fine from 3 to 10 lakh rupees.

Repeated on offenders under this bill will be punishable with imprisonment of 5 to 10 years with the fine of 10 lakh to 5 crore rupees.

Impact of this bill will be that it will help in tackling illicit deposit activities in ours.


It should restrict the unregulated deposit activities so as to safeguard the interest of depositors providing a mechanism framework. The genuine business transaction should not impact the term deposit. It remains to see how different state governments expand the receipt of various amounts which are not regarded as deposits under the u d s audience.