Hello, To our readers
This blog is written to give a short explanation on the Banning of Unregulated Deposit Scheme Ordinance.
India has a large, low-income, rural population with limited access to formal banking facilities. This leads to the limited opportunity for poor people to place their money safely in deposits. Further there is lower rate of returns in Banks and Post Offices. There comes the role of the financial operators who operated Ponzi Schemes which promise to give higher rate of interest/returns on amount deposited.
To curb this practice, Unregulated Deposits Scheme is introduced to impose ban on schemes and arrangements leading to unauthorized collection of money and deposits fraudulently by inducing public to invest in an uncertain scheme that promises high returns or other benefits are still operating in the society.
The ordinance which came into effect on 21st February covers those who collect Unregulated Deposits by way of business (i.e. Unregulated Deposit Takers)
But an important fact to keep in is that this ordinance excludes 1) Banking companies & 2) Companies incorporated under special Act of parliament or state legislature such as – Airport Authority of India, Food Corporation of India or other such type of bodies.
One of its most interesting points is that, it is also applicable to the persons who induce other persons to invest in or become a member of any Unregulated Deposit Scheme.
This scheme aims at saving poor and financially illiterate of their hard earned savings.
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