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Tougher law proposed to tame ponzi schemes

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ponzi schemeA high-level Inter-Ministerial Group assigned the task to suggest measures to curb ponzi schemes has submitted its report to the government. It has suggested a harsher law prescribing jail terms and fines to check unregulated deposits and such schemes, according to sources.

The statutory body, which clearly demarcates deposits into regulated and unregulated categories, has suggested the law to be known as ‘Banning of Unregulated Deposit Schemes and Protection of Depositors’ Interest Bill, 2015’.

In the proposed law, ‘Deposit’ is defined as money in advance or loan or by any other form and returned in a specified period or otherwise in cash or kind or in the form of a specified service with or without any benefit — interest, bonus, profit or any other form. This law will cover all unregulated deposit schemes, the sources added.

The new legislation has a provision of up to seven years jail or a fine of Rs 5-25 crore or three times the amount of profits made out of such defaults, whichever is higher or with both, in case of non-repayment/return of deposits on maturity.

After discussions on the drafts, a decision on the authority to administer the law will be taken. It will now be put on the website of the Department of Financial Services in the Finance Ministry for inviting comments and discussions by stakeholders.

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