The Banning of Unregulated Deposit Schemes Act, 2019

(1) This Act may be called the Banning ofUnregulated Deposit Schemes Act, 2019. (2) It extends to the whole of India except the State of Jammu and Kashmir*. (3) It shall be deemed to have come into force on the 21st day of February, 2019

In this Act, unless the context otherwise requires,-- (1) "appropriate Government" means in respect of matters relating to,-- (i) the Union territory without legislature, the Central Government; (ii) the Union territory of Puducherry, the Government of that Union territory; (iii) the Union territory of Delhi, the Government of that Union territory; and (iv) the State, the State Government; (2) "company" shall have the same meaning as assigned to it in clause (20) of section 2 of the Companies Act, 2013 (18 of 2013); (3) "Competent Authority" means an Authority appointed by the appropriate Government undersection 7; (4) "deposit" means an amount of money received by way of an advance or loan or in any otherform, by any deposit taker with a promise to return whether after a specified period or otherwise,either in cash or in kind or in the form of a specified service, with or without any benefit in the formof interest, bonus, profit or in any other form, but does not include-- (a) amounts received as loan from a scheduled bank or a co-operative bank or any otherbanking company as defined in section 5 of the Banking Regulation Act, 1949 (10 of 1949); (b) amounts received as loan or financial assistance from the Public Financial Institutionsnotified by the Central Government in consultation with the Reserve Bank of India or anynon-banking financial company as defined in clause (f) of section 45-I of the Reserve Bank ofIndia Act, 1934 (2 of 1934) and is registered with the Reserve Bank of India or any RegionalFinancial Institutions or insurance companies; (c) amounts received from the appropriate Government, or any amount received from any othersource whose repayment is guaranteed by the appropriate Government, or any amount receivedfrom a statutory authority constituted under an Act of Parliament or a State Legislature; (d) amounts received from foreign Governments, foreign or international banks, multilateralfinancial institutions, foreign Government owned development financial institutions, foreignexport credit collaborators, foreign bodies corporate, foreign citizens, foreign authorities or personresident outside India subject to the provisions of the Foreign Exchange Management Act, 1999(42 of 1999) and the rules and regulations made thereunder; (e) amounts received by way of contributions towards the capital by partners of any partnershipfirm or a limited liability partnership; (f) amounts received by an individual by way of loan from his relatives or amounts received byany firm by way of loan from the relatives of any of its partners; (g) amounts received as credit by a buyer from a seller on the sale of any property (whethermovable or immovable); (h) amounts received by an asset re-construction company which is registered with the ReserveBank of India under section 3 of the Securitisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 (54 of 2002); (i) any deposit made under section 34 or an amount accepted by a political party under section29B of the Representation of the People Act, 1951 (43 of 1951); (j) any periodic payment made by the members of the self-help groups operating within suchceilings as may be prescribed by the State Government or Union territory Government; (k) any other amount collected for such purpose and within such ceilings as may be prescribedby the State Government; (l) an amount received in the course of, or for the purpose of, business and bearing a genuineconnection to such business including-- (i) payment, advance or part payment for the supply or hire of goods or provision of servicesand is repayable in the event the goods or services are not in fact sold, hired or otherwiseprovided; (ii) advance received in connection with consideration of an immovable property under anagreement or arrangement subject to the condition that such advance is adjusted against suchimmovable property as specified in terms of the agreement or arrangement; (iii) security or dealership deposited for the performance of the contract for supply of goodsor provision of services; or (iv) an advance under the long-term projects for supply of capital goods except thosespecified in item (ii): Provided that if the amounts received under items (i) to (iv) become refundable, suchamounts shall be deemed to be deposits on the expiry of fifteen days from the date on whichthey become due for refund: Provided further that where the said amounts become refundable, due to the deposit takernot obtaining necessary permission or approval under the law for the time being in force,wherever required, to deal in the goods or properties or services for which money is taken, suchamounts shall be deemed to be deposits. Explanation.--For the purposes of this clause,-- (i) in respect of a company, the expression "deposit" shall have the same meaning asassigned to it under the Companies Act, 2013 (18 of 2013); (ii) in respect of a non-banking financial company registered under the Reserve Bank ofIndia Act, 1934 (2 of 1934), the expression deposit shall have the same meaning as assignedto it in clause (bb) of section 45-I of the said Act; (iii) the expressions partner and firm shall have the meanings respectively assigned tothem under the Indian Partnership Act, 1932 (9 of 1932); (iv) the expression partner in respect of a limited liability partnership shall have the samemeaning as assigned to it in clause (q) of sub-section (1) of section 2 of the Limited LiabilityPartnership Act, 2008 (6 of 2009); (v) the expression "relative" shall have the same meaning as assigned to it in the CompaniesAct, 2013 (18 of 2013); (5) "depositor" means any person who makes a deposit under this Act; (6) "deposit taker" means-- (i) any individual or group of individuals; (ii) a proprietorship concern; (iii) a partnership firm (whether registered or not); (iv) a limited liability partnership registered under the Limited Liability Partnership Act, 2008(6 of 2009); (v) a company; (vi) an association of persons; (vii) a trust (being a private trust governed under the provisions of the Indian Trusts Act, 1882(2 of 1882) or a public trust, whether registered or not); (viii) a co-operative society or a multi-State co-operative society; or (ix) any other arrangement of whatsoever nature, receiving or soliciting deposits, but does notinclude-- (i) a Corporation incorporated under an Act of Parliament or a State Legislature; (ii) a banking company, a corresponding new bank, the State Bank of India, a subsidiarybank, a regional rural bank, a co-operative bank or a multi-State co-operative bank as defined inthe Banking Regulation Act,1949 (10 of 1949); (7) "Designated Court" means a Designated Court constituted by the appropriate Governmentunder section 8; (8) "insurer" shall have the same meaning as assigned to it in clause (9) of section 2 of theInsurance Act, 1938 (4 of 1938); (9) "notification" means a notification published in the Official Gazette and the expression"notify" shall be construed accordingly; (10) "person" includes-- (i) an individual; (ii) a Hindu Undivided Family; (iii) a company; (iv) a trust; (v) a partnership firm; (vi) a limited liability partnership; (vii) an association of persons; (viii) a co-operative society registered under any law for the time being in force relating to cooperative societies; or (ix) every artificial juridical person, not falling within any of the preceding sub-clauses; (11) "prescribed" means prescribed by the rules made by the Central Government or, as the casemay be, the State Government under this Act; (12) "property" means any property or assets of every description, whether corporeal orincorporeal, movable or immovable, tangible or intangible, and includes deeds and instrumentsevidencing title to, or interest in, such property or assets, wherever located; (13) "public financial institution" shall have the same meaning as assigned to it in clause (72) ofsection 2 of the Companies Act, 2013 (18 of 2013); (14) "Regulated Deposit Scheme" means the Schemes specified under column (3) of the FirstSchedule; (15) "Regulator" means the Regulator specified in column (2) of the First Schedule; (16) "Schedule" means the Schedule appended to this Act; (17) "Unregulated Deposit Scheme means a Scheme or an arrangement under which deposits areaccepted or solicited by any deposit taker by way of business and which is not a Regulated DepositScheme, as specified under column (3) of the First Schedule. STATE AMENDMENT Union Territory of Jammu and Kashmir Section 2.--In clause (1), in sub-clause (iii), omit "and" and after sub-clause (iii) as so omitted,insert-- "(iiia) the Union territory of Jammu and Kashmir, the Government of that Union territory; and". [Vide Union Territory of Jammu and Kashmir Reorganisation (Adaptation of Central Laws) SecondOrder, 2020, Notification No. S.O. 3465(E), dated (5-10-2020).]

On and from the date of commencement of thisAct, (a) the Unregulated Deposit Schemes shall be banned; and (b) no deposit taker shall, directly or indirectly, promote, operate, issue any advertisementsoliciting participation or enrolment in or accept deposits in pursuance of an Unregulated DepositScheme.

No deposit taker, while acceptingdeposits pursuant to a Regulated Deposit Scheme, shall commit any fraudulent default in therepayment or return of deposit on maturity or in rendering any specified service promised against suchdeposit.

No person by whatevername called shall knowingly make any statement, promise or forecast which is false, deceptive ormisleading in material facts or deliberately conceal any material facts, to induce another person toinvest in, or become a member or participant of any Unregulated Deposit Scheme.