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Ban On Unregulated Deposit Schemes Ordinance, 2019: What It Implies?

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Last week, just few months ahead of the general assembly elections 2019, the government has put a ban on Unregulated Deposit Schemes Ordinance, 2019. The effect of the ban will be more pronounced given the timing of such an announcement and experts compare it to the November 2016 event of demonetisation which came in just 3 months prior to elections in Uttar Pradesh.

Ban On Unregulated Deposit Schemes Ordinance, 2019: What It Implies?
 

Also, the move will protect investors who give in to different ponzi and chit fund schemes.

Within the scope of the unregulated deposit scheme ordinance 2019, the ability to enhance financial resources to meet different social and personal commitments or different urgencies will see no extended resources as the law permits taking loans only from relatives. And the definition of relatives is limited up to only immediate family members.

The law in this regard permits deposits from banks, financial institutions, property buyers, customers and for other purposes. Likewise, a proprietor can engage in borrowing activity from a non-relative so long the borrowing is for business dealings only.

Also, it will prove to be a blow for the ailing real-estate sector, as developers or property sellers will only be able to accept deposits for a designated transaction and the amount can be adjusted against future sale consideration.

The move in all is an attempt to safeguard gullible investors from yielding in to ponzi and pyramid schemes. Also, as the idea of the deposit means money received by way of loan or advance or in any other form by any deposit taker with a promise of returning either in cash or kind or as a specified service. So, the acceptance of unregulated deposits may provide a trigger to freezing and attachment of assets and also may result in imprisonment.

GoodReturns.in

Story first published: Monday, February 25, 2019, 11:52 [IST]
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