Cabinet moves Bill to ban unregulated deposit schemes like ‘ponzi’ and ‘cryptocurrencies’

In the Budget 2018, Finance Minister had said reiterating his stand and extending the warning one more time, that dealing with cryptocurrencies was not legal in India. The Cabinet on 20-03-2018, approved to introduce Banning of Unregulated Deposit Schemes Bill, 2018, which includes Ponzi schemes and the usage of cryptocurrencies. With the passage of this bill, it is likely that Ponzi schemes and dealing in cryptocurrencies will become illegal.

The Bill seeks to ban unregulated deposit schemes with a view to curb defrauding of gullible investors through chit funds. The bill is aimed at tackling the menace of illicit deposit-taking activities in the country as in the recent past there have been rising instances of people in various parts of the country being defrauded by such schemes. Companies and institutions running such schemes exploit the existing regulatory gaps and lack of strict administrative measures to dupe the poor and gullible people of their hard-earned savings. The worst victims are the poor and the financially illiterate, and the operations of such schemes are often spread over many States.

To curb black money and corruption, Government cleared the Bill, by making even the act of running such Ponzi schemes an offence. According to the new law, real estate developers that offer schemes with fixed returns till possession will come under “unregulated deposits”. Similarly, some jewellers, offer schemes in which the consumers pay 11 instalments while the company pay the 12th one. Other schemes have offers where consumers pay instalments for at least 10 months and get up to 50 % discounts in monthly contribution. All these schemes will be illegal under the new law. There have been several instances in the past where government try to curb these schemes but could not succeed. A new comprehensive law would completely prohibit unregulated deposit-taking and provide for deterrent punishment for promoting or operating such schemes, besides introducing other changes.


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