Ponzi menace: Govt moots Rs 50 crore fine, 10 years’ jail
Government on Friday came out with modified draft bill to check the menace of Ponzi schemes through a set of measures which include imprisonment of up to 10 years and fine of up to Rs 50 crore.
The revised Draft ‘Banning of Unregulated Deposit Schemes and Protection of Depositors Interests Bill, 2016’ aims to provide for a comprehensive code to ban unregulated deposit schemes to protect the interests of depositors and the connected matters.
The draft bill, which has been finalised as per recommendations of an Inter-Ministerial Group, provides that offenders will be punished with imprisonment for minimum term of one year which may be extended to 5 years and with fine which may extend to Rs 10 lakh.
In case of repeat offenders, the draft bill proposes imprisonment for a minimum term of 5 years which may be extended to 10 years and fine extended to Rs 50 crore.
Public comments have been sought till December 17 on the proposed law to override a clutch of existing laws, including those framed by the states. It also proposes fines for wrongfully inducing people to unlawful schemes and directors and officials of such firms would be prosecuted.
A Ponzi scheme typically involves the operator collecting a large amount of money from investors and paying them returns from their own money or the money collected from subsequent investors, rather than from profit earned by the person or entity operating such a scheme.
The government had constituted an Inter-Ministerial Group (IMG) for identifying gaps in the existing regulatory framework for deposit-taking activities and to suggest administrative or legislative measures including formulation of a new law to cover all relevant aspects of deposit-taking.
Based on the comments received and further consultations with the stakeholders, the Draft Bill has been modified which now again has been uploaded on Department of Financial Services website for public comments, it said. Arun Jaitley also announced in the Budget 2016-17 that a comprehensive central legislation would be brought in during this fiscal to deal with the menace of unauthorised deposit taking schemes.