The Banning of Unregulated Deposit Schemes Bill, 2018, will be taken up in the Lok Sabha for discussion and may be considered for passing the bill on Thursday.

The proposed bill will be used to tackle illicit deposit schemes and will work in alliance with the Chit Funds (Amendment) Bill, which was introduced in the Budget Session.

The bill defines a deposit as an amount of money which is received via an advance, a loan, or in any other form, with a promise to be returned with or without interest.

For such deposits, the time may or may not be mentioned and it can be repaid via a service or in cash.

If passed, the deposit takers will be stopped from camouflaging public deposits as receipts, and simultaneously will not curb or hinder the acceptance of money by an establishment.

“The bill is aimed at tackling the menace of illicit deposit-taking activities in the country. 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,” a finance ministry statement released by the PIB (Press Information Bureau) on February 28 read.

The proposed bill has provided a mechanism to ban the unregulated deposit schemes and protect the interests of depositors and seeks to amend three laws which include The Reserve Bank of India (RBI) Act, 1934 and the Securities and Exchange Board of India (Sebi) Act, 1992.

The proposed bill aims to provide a comprehensive legislation to tackle illegal and illicit deposit schemes and forbid these activities.

Out of the nine regulators monitoring these transactions - RBI, Sebi, the ministry of corporate affairs and the state governments - are included in the list to control the financial activities.

If the deposit-taking schemes are not registered with the nine-mentioned regulators, the 'deposit takers' will be considered 'unregulated' and therefore be banned.

The proposed bill has approved creating designated courts to tackle such cases.

One can be penalised if an individual runs advertisements, promotes, operates or accepts money for unregulated deposit schemes; if an individual is caught with defaulting regulated deposit schemes and if an individual is wrongfully inducing depositors to invest in these deposit schemes by falsifying facts.