Indian Government's Cabinet approves bill that bans ponzi schemes, cryptocurrencies

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, today gave approval to Unregulated Deposit Schemes Bill, 2018 that seeks to ban all unregulated deposit schemes including Ponzi schemes and the ones linked to cryptocurrencies.

The bill is aimed at tackling the menace of illicit deposit taking activities in the country, said a Finance Ministry statement.

Companies and 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 statement said.

The government had recently warned investors of investing in cryptocurrencies like Bitcoins, saying those were like ponzi schemes.

“The bill provides for a complete prohibition of unregulated deposit taking activity, deterrent punishment for promoting or operating an unregulated deposit taking scheme, stringent punishment for fraudulent default in repayment to depositors, designation of a Competent Authority by the state government to ensure repayment of deposits in the event of default by a deposit taking establishment, powers and functions of the competent authority including the power to attach assets of a defaulting establishment, designation of courts to oversee repayment of depositors and to try offences under the Act; and listing of Regulated Deposit Schemes in the Bill, with a clause enabling the Central Government to expand or prune the list,” said the statement.

Finance Minister Arun Jaitley in his Budget 2018 speech had announced that a comprehensive central legislation would be brought in to deal with the menace of illicit deposit taking schemes, as in the recent past, there have been rising instances of people in various parts of the country being defrauded by illicit deposit taking schemes.

The draft bill to curtail the menace of illicit deposit schemes had been placed in the public domain and would be introduced shortly after its finalisation.