Law Against Ponzi Schemes

  Jun 11, 2020

Law Against Ponzi Schemes

Banning of Unregulated Deposit Schemes Act, 2019 seeks to prevent unregulated entities from collecting deposits and cheating and exploiting the poor and the gullible public of their hard earned money and punish the former.

It gives powers to the government to prohibit companies from taking such funds from the public. 

Anyone can be put behind the bars and given strict punishment for the following fraudulent activity:

Accepting unregulated deposits will be punishable and can also lead to imprisonment, along with fines ranging between ₹3 lakh and ₹5 lakh. 

Repeat offenders could face imprisonment between 5 and 10 years, along with a fine amounting to ₹5-10 crore.

It thus provides for a mechanism to ban unregulated deposit schemes and protect the interests of depositors.  It amends three laws

It is a remedy to the ponzi schemes- financial frauds like Illicit deposit taking firms, in the country which at present are exploiting regulatory gaps and lack of strict administrative measures.