Banning of Unregulated Deposit Scheme

  • The object was to ban the chit fund schemes like Sharda, PACL.
  • Its comes into effect immediately
  • Only “Unregulated Deposit Schemes” are banned.
  • Unregulated Deposit Scheme” as given in section 2(17), which states Unregulated Deposit scheme means a scheme or an arrangement under which deposits are accepted or solicited by way of businessand which is not a Regulated Deposit Scheme as specified under column(3) of the First Schedule.
  • It applies only for the deposit takers whose business is of taking deposits.Only unregulated deposit schemes are banned and individual loan transactions are not in its ambit.Normal business loans not affected.
  • A “scheme” according to the dictionary meaning of that word is a carefully arranged and systematic programme of action ‘a systematic plan for attending some object’, ‘ a project’, ‘a system of correlated things’.The systematic programme of action has to be a consensual arrangement between two or more persons under which, the subscriber agrees to advance or lend money on promise of being paid more money on the happening of any event or contingency relative or applicable to the enrollment of members in to the programme [ State of W.B. v. Swapan Kumar Guha, AIR 1982 SC 949].
  • Accordingly normal individual loans and business loan are not part of scheme or arrangement.
  • But if loan was taken for giving further loan, its comes under Unregulated Deposit Scheme, which may be prohibited. Clarification in this regard can put confusion to rest.

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