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To keep a check on Ponzi schemes, the government has proposed a jail term of up to seven years for those who raise funds through unregulated deposits.
The Union Cabinet on Tuesday gave its approval to introduce Banning of Unregulated Deposit Schemes Bill, 2018, in Parliament.
The government has proposed a graded punishment under which the entities soliciting unregulated deposits will face a jail term of one to five years. For unregistered entities accepting deposits, a jail term of up to seven years has been proposed. Along with it, those who are at default on repayment of unregulated deposits will have to face an additional term of three years, according to a report in The Times of India.
"Companies/ institutions running such schemes exploit existing regulatory gaps and lack of strict administrative measures to dupe poor and gullible people of their hard-earned savings," said the government in an official statement on the day of introducing the bill.
The worst victims of such schemes are the poor and the financially illiterate, and the operations of such schemes are often spread over many states, said the statement. As per the bill, competent authorities would be set up by state governments to "ensure repayment of deposits in the event of default by a deposit taking establishment."
The bill also proposed to set up an online central database, for collection and sharing of information on deposit taking activities in the country.
In the budget speech of 2016-17, finance minister Arun Jaitley had raised concerns over people being defrauded by illicit deposit taking schemes and announced that steps would be taken to deal with it. In the next budget speech, he had said that the draft bill in this reagrd had been placed in the public domain and would be introduced shortly after its finalisation.
(With inputs from PTI)
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