To safeguard the savings of small investors, the Union Cabinet, chaired by Prime Minister Narendra Modi, has given its approval to introduce Banning of Unregulated Deposit Schemes Bill, 2018, in Parliament. The aim is to check illicit deposit-taking schemes, which happens to be a widespread practice in the country.
According to an official statement, "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." The Bill features three different types of offences, namely, running of unregulated deposit schemes, fraudulent default in regulated deposit schemes and wrongful inducement in relation to unregulated deposit schemes. The Bill states it will provide for punishment and heavy pecuniary fines to act as a deterrent.
Moreover, for the orderly growth of the chit funds sector and for removing the bottlenecks being faced by the chit funds industry, various amendments to the Chit Funds Act, 1982, have been proposed.