THE BANNING OF UNREGULATED DEPOSIT SCHEMES ACT, 2019  
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ARRANGEMENT OF SECTIONS                                                                                                            

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CHAPTER I 

PRELIMINARY 

SECTIONS 

1. Short title, extent and commencement. 

2. Definitions. 

CHAPTER II 

BANNING OF UNREGULATED DEPOSIT SCHEMES. 

3. Banning of Unregulated Deposit Schemes. 

4. Fraudulent default in Regulated Deposit Schemes. 

5. Wrongful inducement in relation to Unregulated Deposit Schemes. 

6. Certain scheme to be Unregulated Deposit Scheme. 

CHAPTER III 

AUTHORITIES 

7. Competent Authority. 

8. Designated Court. 

CHAPTER IV  

INFORMATION ON DEPOSIT TAKERS 

9. Central database. 

10. Information of business by deposit taker. 

11. Information to be shared. 

CHAPTER V 

RESTITUTION TO DEPOSITORS 

12. Priority of depositors' claim. 

13. Precedence of attachment. 

14. Application for confirmation of attachment and sale of property. 

15. Confirmation of attachment by Designated Court. 

16. Attachment of property of mala fide transferees. 

17. Payment in lieu of attachment. 

18. Powers of Designated Court. 

19. Appeal to High Court. 

20. Power of Supreme Court to transfer cases. 

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SECTIONS 

CHAPTER VI 

OFFENCES AND PUNISHMENTS 

21. Punishment for contravention of section 3. 

22. Punishment for contravention of section 4. 

23. Punishment for contravention of section 5. 

24. Punishment for repeat offenders. 

25. Offences by deposit takers other than individuals. 

26. Punishment for contravention of section 10. 

27. Cognizance of offences. 

CHAPTER VII 

INVESTIGATION, SEARCH AND SEIZURE 

28. Offences to be cognizable and non-bailable. 

29. Competent Authority to be informed of offences. 

30. Investigation of offences by Central Bureau of Investigation. 

31. Power to enter, search and seize without warrant. 

32. Application of Code of Criminal Procedure, 1973 to proceedings before Designated Court. 

CHAPTER VIII 

MISCELLANEOUS 

33. Publication of advertisement of Unregulated Deposit Scheme. 

34. Act to have overriding effect. 

35. Application of other laws not barred. 

36. Protection of action taken in good faith. 

37. Power of Central Government to make rules. 

38. Power of State Government, etc., to make rules. 

39.  Laying of rules. 

40. Power to amend First Schedule. 

41. Act not to apply certain deposits. 

42. Amendment to certain enactments. 

43. Power to remove difficulties. 

44. Repeal and saving. 

    THE FIRST SCHEDULE 
    THE SECOND SCHEDULE 

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THE BANNING OF UNREGULATED DEPOSIT SCHEMES ACT, 2019  

ACT NO. 21 OF 2019 

An Act to provide for a comprehensive mechanism to ban the unregulated deposit schemes, other than 
deposits taken in the ordinary course of business, and to protect the interest of depositors and for 
matters connected therewith or incidental thereto.  

BE it enacted by Parliament in the Seventieth Year of the Republic of India as follows:— 

[31st July, 2019.] 

CHAPTER I 

PRELIMINARY 

1. Short title, extent and commencement.—(1) This Act may be called the Banning of Unregulated 

Deposit Schemes Act, 2019.  

(2) It extends to the whole of India *except the State of Jammu and Kashmir.  

(3) It shall be deemed to have come into force on the 21st day of February, 2019 

2. Definitions—In this Act, unless the context otherwise requires,—  

(1) “appropriate Government” means in respect of matters relating to,—  

(i) the Union territory without legislature, the Central Government;  

(ii) the Union territory of Puducherry, the Government of that Union territory;  

(iii) the Union territory of Delhi, the Government of that Union territory; and; 

(iv) the State, the State Government;  

(2)  “company”  shall  have  the  same  meaning  as  assigned  to  it  in  clause  (20)  of  section  2  of  the 

Companies Act, 2013 (18 of 2013);  

(3) “Competent Authority” means an Authority appointed by the appropriate Government under section 7;  

(4) “deposit” means an amount of money received by way of an advance or loan or in any other form, by any 
deposit taker with a promise to return whether after a specified period or otherwise, either in cash or in kind or in the 
form of a specified service, with or without any benefit in the form of interest, bonus, profit or in any other form, but 
does not include— 

 (a) amounts received as loan from a scheduled bank or a co-operative bank or any other banking company as 

defined in section 5 of the Banking Regulation Act, 1949 (10 of 1949); 

 (b)  amounts  received  as  loan  or  financial  assistance  from  the  Public  Financial  Institutions  notified  by  the 
Central  Government  in  consultation  with  the  Reserve  Bank  of  India  or  any  non-banking  financial  company  as 
defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934) and is registered with the 
Reserve Bank of India or any Regional Financial Institutions or insurance companies; 

*. Now applicable to the Union territory of Jammu and Kashmir and the Union territory of Ladakh by vide notification No. S.O. 
3912 (E), dated 30th October, 2019. 

. 

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(c)  amounts received  from  the  appropriate  Government,  or  any  amount  received  from  any  other  source 
whose repayment is guaranteed by the appropriate Government, or any amount received from a statutory 
authority constituted under an Act of Parliament or a State Legislature; 

(d)  amounts  received  from  foreign  Governments,  foreign  or  international  banks,  multilateral 
financial  institutions,  foreign  Government  owned  development  financial  institutions,  foreign  export 
credit  collaborators,  foreign  bodies  corporate,  foreign  citizens,  foreign  authorities  or  person  resident 
outside India subject to the provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) 
and the rules and regulations made thereunder;  

(e)  amounts  received  by  way  of  contributions  towards  the  capital  by  partners  of  any  partnership 

firm or a limited liability partnership;  

(f) amounts received by an individual by way of loan from his relatives or amounts received by any 

firm by way of loan from the relatives of any of its partners; 

(g)  amounts  received  as  credit  by  a  buyer  from  a  seller  on  the  sale  of  any  property  (whether 

movable or immovable);  

(h)  amounts  received  by  an  asset  re-construction  company  which  is  registered  with  the  Reserve 
Bank  of  India  under  section  3  of  the  Securitisation  and  Reconstruction  of  Financial  Assets  and 
Enforcement of Security Interest Act, 2002 (54 of 2002); 

(i) any deposit made under section 34 or an amount accepted by a political party under section 29B 

of the Representation of the People Act, 1951 (43 of 1951); 

(j)  any  periodic  payment  made  by  the  members  of  the  self-help  groups  operating  within  such 

ceilings as may be prescribed by the State Government or Union territory Government;  

(k) any other amount collected for such purpose and within such ceilings as may be prescribed by 

the State Government; 

(l)  an  amount  received  in  the  course  of,  or  for  the  purpose  of,  business  and  bearing  a  genuine 

connection to such business including— 

(i) payment, advance or part payment for the supply or hire of goods or provision of services and 

is repayable in the event the goods or services are not in fact sold, hired or otherwise provided; 

(ii)  advance  received  in  connection  with  consideration  of  an  immovable  property  under  an 
agreement  or  arrangement  subject  to  the  condition  that  such  advance  is  adjusted  against  such 
immovable property as specified in terms of the agreement or arrangement;  

(iii) security or dealership deposited for the performance of the contract for supply of goods or 

provision of services; or 

(iv) an advance under the long-term projects for supply of capital goods except those specified 

in item (ii): 

Provided that if the amounts received under items (i) to (iv) become refundable, such amounts 
shall be deemed to be deposits on the expiry of fifteen days from the date on which they become 
due for refund:  

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Provided  further  that  where  the said  amounts  become  refundable, due to  the  deposit  taker  not 
obtaining  necessary  permission  or  approval  under  the  law  for  the  time  being  in  force,  wherever 
required,  to  deal  in  the  goods  or  properties  or  services  for  which  money  is  taken,  such  amounts 
shall be deemed to be deposits.  

Explanation.—For the purposes of this clause,— 

 (i) in respect of a company, the expression “deposit” shall have the same meaning as assigned 

to it under the Companies Act, 2013 (18 of 2013);  

(ii) in respect of a non-banking financial company registered under the Reserve Bank of India 
Act, 1934 (2 of 1934), the expression “deposit” shall have the same meaning as assigned to it in 
clause (bb) of section 45-I of the said Act;  

(iii) the expressions “partner” and “firm” shall have the meanings respectively assigned to them 

under the Indian Partnership Act, 1932 (9 of 1932);  

(iv)  the  expression  “partner”  in  respect  of  a  limited  liability  partnership  shall  have  the  same 
meaning  as  assigned  to  it  in  clause  (q)  of  sub-section  (1)  of  section  2  of  the  Limited  Liability 
Partnership Act, 2008 (6 of 2009);  

(v)  the  expression  “relative”  shall  have  the  same  meaning  as  assigned  to  it  in  the  Companies 

Act, 2013 (18 of 2013);  

(5) “depositor” means any person who makes a deposit under this Act;  

(6) “deposit taker” means— 

(i) any individual or group of individuals;  

(ii) a proprietorship concern; 

(iii) a partnership firm (whether registered or not);  

(iv) a limited liability partnership registered under the Limited Liability Partnership Act, 2008 (6 of 

2009); 

(v) a company;  

(vi) an association of persons; 

(vii) a trust (being a private trust governed under the provisions of the Indian Trusts Act, 1882 (2 of 

1882) or a public trust, whether registered or not); 

(viii) a co-operative society or a multi-State co-operative society; or  

(ix)  any  other  arrangement  of  whatsoever  nature,  receiving  or  soliciting  deposits,  but  does  not 

include—  

(i) a Corporation incorporated under an Act of Parliament or a State Legislature; 

(ii) a banking company, a corresponding new bank, the State Bank of India, a subsidiary bank, a 
regional  rural  bank,  a  co-operative  bank  or  a  multi-State  co-operative  bank  as  defined  in  the 
Banking Regulation Act,1949 (10 of 1949); 

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(7)  “Designated  Court”  means  a  Designated  Court  constituted  by  the  appropriate  Government  under 

section 8;  

(8) “insurer” shall have the same meaning as assigned to it in clause (9) of section 2 of the Insurance 

Act, 1938 (4 of 1938);  

(9)  “notification”  means  a  notification  published  in  the  Official  Gazette  and  the  expression  “notify” 

shall be construed accordingly; 

(10) “person” includes—  

(i) an individual;  

(ii) a Hindu Undivided Family; 

(iii) a company;  

(iv) a trust;  

(v) a partnership firm;  

(vi) a limited liability partnership;  

(vii) an association of persons;  

(viii)  a  co-operative  society  registered  under  any  law  for  the  time  being  in  force  relating  to              

co-operative societies; or 

(ix) every artificial juridical person, not falling within any of the preceding sub-clauses; 

(11) “prescribed” means prescribed by the rules made by the Central Government or, as the case may 

be, the State Government under this Act; 

(12) “property” means any property or assets of every description, whether corporeal or incorporeal, 
movable or immovable, tangible or intangible, and includes deeds and instruments evidencing title to, or 
interest in, such property or assets, wherever located; 

(13)  “public  financial  institution”  shall  have  the  same  meaning  as  assigned  to  it  in  clause  (72)  of 

section 2 of the Companies Act, 2013 (18 of 2013);  

(14)  “Regulated  Deposit  Scheme”  means  the  Schemes  specified  under  column  (3)  of  the  First 

Schedule;  

(15) “Regulator” means the Regulator specified in column (2) of the First Schedule;  

(16) “Schedule” means the Schedule appended to this Act;  

(17)  “Unregulated  Deposit  Scheme”  means  a  Scheme  or  an  arrangement  under  which  deposits  are 
accepted  or  solicited  by  any  deposit  taker  by  way  of  business  and  which  is  not  a  Regulated  Deposit 
Scheme, as specified under column (3) of the First Schedule. 

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Union Territory of Jammu and Kashmir 

STATE AMENDMENT 

Section 2.—In clause (1), in sub-clause (iii), omit "and" and after sub-clause (iii) as so omitted, 

insert— 

“(iiia) the Union territory of Jammu and Kashmir, the Government of that Union territory; and”. 

[Vide Union Territory of Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Second 
Order, 2020, Notification No. S.O. 3465(E), dated (5-10-2020).] 

CHAPTER II 
BANNING OF UNREGULATED DEPOSIT SCHEMES 

3.  Banning  of  Unregulated  Deposit  Schemes.  —  On  and  from  the  date  of  commencement  of  this 

Act,—  

(a) the Unregulated Deposit Schemes shall be banned; and  

(b) no deposit taker shall, directly or indirectly, promote, operate, issue any advertisement soliciting 

participation or enrolment in or accept deposits in pursuance of an Unregulated Deposit Scheme. 

4. Fraudulent default in Regulated Deposit Schemes. —No deposit taker, while accepting deposits 
pursuant to a Regulated Deposit Scheme, shall commit any fraudulent default in the repayment or return 
of deposit on maturity or in rendering any specified service promised against such deposit.  

5.  Wrongful  inducement  in  relation  to  Unregulated  Deposit  Schemes.—No  person  by  whatever 
name  called  shall  knowingly  make  any  statement,  promise  or  forecast  which  is  false,  deceptive  or 
misleading in material facts or deliberately conceal any material facts, to induce another person to invest 
in, or become a member or participant of any Unregulated Deposit Scheme. 

6. Certain scheme to be Unregulated Deposit Scheme.—A prize chit or a money circulation scheme 
banned under the provisions of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978 (43 of 
1978) shall be deemed to be an Unregulated Deposit Scheme under this Act. 

CHAPTER III 

AUTHORITIES 

7.  Competent  Authority.  —  (1)  The  appropriate  Government  shall,  by  notification,  appoint  one  or 
more  officers  not  below  the  rank  of  Secretary  to  that  Government,  as  the  Competent  Authority  for  the 
purposes of this Act. 

(2) The appropriate Government may, by notification, appoint such other officer or officers as it thinks 

fit, to assist the Competent Authority in discharging its functions under this Act. 

(3)  Where  the  Competent  Authority  or  officers  appointed  under  sub-section  (2),  for  the  purposes  of 
this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of 
such  information  and  particulars  as  may  be  prescribed,  that  any  deposit  taker  is  soliciting  deposits  in 
contravention of section 3, he may, by an order in writing, provisionally attach the deposits held by the 
deposit taker and the money or other property acquired either in the name of the deposit taker or in the 

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name of any other person on behalf of the deposit taker from the date of the order, in such manner as may 
be prescribed.  

(4) The Competent Authority shall, for the purposes of sub-section (3), have the same powers as vested 
in  a  civil  court  under  the Code  of  Civil  Procedure, 1908  (5  of  1908)  while  conducting  investigation  or 
inquiry in respect of the following matters, namely:— 

(a) discovery and inspection; 

(b)  enforcing  the  attendance  of  any  person,  including  any  officer  of  a  reporting  entity  and 

examining him on oath;  

(c) compelling the production of records;  

(d) receiving evidence on affidavits;  

(e) issuing commissions for examination of witnesses and documents; and  

(f) any other matter which may be prescribed.  

(5) The Competent Authority shall have power to summon any person whose attendance he considers 
necessary whether to give evidence or to produce any records during the course of any investigation or 
proceeding under this section.  

(6) All the persons so summoned shall be bound to attend in person or through authorised agents, as 
such officer may direct, and shall be bound to state the truth upon any subject respecting which they are 
examined or make statements, and produce such documents as may be required.  

(7) Every proceeding under sub-sections (4) and (5) shall be deemed to be a judicial proceeding within 

the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). 

(8) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-
section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced 
before him in any proceedings under this Act: 

Provided that the officer or officers referred to in sub-section (2) shall not—  

(a) impound any records without recording his reasons for so doing; or  

(b) retain in his custody any such records for a period exceeding three months, without obtaining 

the previous approval of the Competent Authority. 

 8.  Designated  Court.  —  (1)  The  appropriate  Government  shall,  with  the  concurrence  of  the  Chief 
Justice  of  the  concerned  High  Court,  by  notification,  constitute  one  or  more  Courts  known  as  the 
Designated Courts for such area or areas or such case or cases as may be specified in such notification, 
which shall be presided over by a Judge not below the rank of a District and Sessions Judge or Additional 
District and Sessions Judge. 

(2) No Court other than the Designated Court shall have jurisdiction in respect of any matter to which 

the provisions of this Act apply.  

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(3) When trying an offence under this Act, the Designated Court may also try an offence, other than an 
offence under this Act, with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 
1974), be charged at the same trial.  

CHAPTER IV 

INFORMATION ON DEPOSIT TAKERS 

9. Central database. — (1) The Central Government may designate an authority, whether existing or 
to be constituted, which shall create, maintain and operate an online database for information on deposit 
takers operating in India.  

(2)  The  authority  designated  under  sub-section  (1)  may  require  any  Regulator  or  the  Competent 

Authority to share such information on deposit takers, as may be prescribed.  

10. Information of business by deposit taker.—(1) Every deposit taker which commences or carries 
on its business as such on or after the commencement of this Act shall intimate the authority referred to in 
sub-section (1) of section 9 about its business in such form and manner and within such time, as may be 
prescribed. 

(2) The Competent Authority may, if it has reason to  believe that the deposits are being solicited or 
accepted pursuant to an Unregulated Deposit Scheme, direct any deposit taker to furnish such statements, 
information or particulars, as it considers necessary, relating to or connected with the deposits received by 
such deposit taker. 

Explanation.—For the removal of doubts, it is hereby clarified that—  

(a) the requirement of intimation under sub-section (1) is applicable to deposit takers accepting or 

soliciting deposits as defined in clause (4) of section 2; and  

(b)  the  requirement  of  intimation  under  sub-section  (1)  applies  to  a  company,  if  the  company 

accepts the deposits under Chapter V of the Companies Act, 2013 (18 of 2013).  

11. Information to be shared. — (1) The Competent Authority shall share all information received 
under section 29 with the Central Bureau of Investigation and with the authority which may be designated 
by the Central Government under section 9.  

(2)  The  appropriate  Government,  any  Regulator,  income-tax  authorities  or  any  other  investigation 
agency, having any information or documents in respect of the offence investigated under this Act by the 
police  or  the  Central  Bureau  of  Investigation,  shall  share  all  such  information  or  documents  with  the 
police or the Central Bureau of Investigation.  

(3) Where the principal officer of any banking company, a corresponding new bank, the State Bank of 
India, a subsidiary bank, a regional rural bank, a co-operative bank or a multi-State co-operative bank has 
reason to believe that any client is a deposit taker and is acting in contravention to the provisions of this 
Act, he shall forthwith inform the same to the Competent Authority. 

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CHAPTER V 

RESTITUTION TO DEPOSITORS 

12.  Priority  of  depositors’  claim.  —  Save  as  otherwise  provided  in  the  Securitisation  and 
Reconstruction  of  Financial  Assets  and  Enforcement  of  Security  Interest  Act,  2002  (54  of  2002)  or  the 
Insolvency and Bankruptcy Code, 2016 (31 of 2016), any amount due to depositors from a deposit taker 
shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the 
appropriate Government or the local authority.  

13.  Precedence  of  attachment.  —  (1)  Save  as  otherwise  provided  in  the  Securitisation  and 
Reconstruction  of  Financial  Assets  and  Enforcement  of  Security  Interest  Act,  2002  (54  of  2002)  or  the 
Insolvency  and  Bankruptcy  Code,  2016  (31  of 2016),  an  order  of  provisional  attachment  passed  by  the 
Competent  Authority,  shall  have  precedence  and  priority,  to  the  extent  of  the  claims  of  the  depositors, 
over  any  other  attachment  by  any  authority  competent  to  attach  property  for  repayment  of  any  debts, 
revenues, taxes, cesses and other rates payable to the appropriate Government or the local authority.  

(2) Where an order of provisional attachment has been passed by the Competent Authority— 

(a) such attachment shall continue until an order is passed under sub-section (3) or sub-section (5) 

of section 15 by the Designated Court;  

(b) all the attached money or property of the deposit taker and the persons mentioned therein shall 

vest in the Competent Authority and shall remain so vested till further order of the Designated Court.  

(3) The Competent Authority shall open an account in a scheduled bank for the purpose of crediting 
and  dealing  with  the  money  realised  under  this  Act,  which  shall  not  be  utilised  except  under  the 
instructions of the Designated Court.  

(4) The Competent Authority shall not dispose of or alienate the property or money attached, except in 

accordance with the order of the Designated Court under sub-section (3) or sub-section (5) of section 15. 

(5) Notwithstanding anything contained in sub-section (4), the Competent Authority may, if it thinks it 
expedient,  order  the  immediate  sale  of  perishable  items  or  assets,  and  the  proceeds  of  the  sale  shall  be 
utilised in the same manner as provided for other property. 

14.  Application  for  confirmation  of  attachment  and  sale  of  property.—(1)  The  Competent 
Authority  shall,  within  a  period  of  thirty  days,  which  may  extend  up  to  sixty  days,  for  reasons  to  be 
recorded  in  writing,  from  the  date  of  the  order  of  provisional  attachment,  file  an  application  with  such 
particulars  as  may  be  prescribed,  before  the  Designated  Court  for  making  the  provisional  attachment 
absolute, and for permission to sell the property so attached by public auction or, if necessary, by private 
sale. 

(2) In case where the money or property has been attached on the permission granted by a Designated 
Court in another State or Union territory, the application for confirmation of such attachment shall be filed 
in that Court. 

15. Confirmation of attachment by Designated Court. — (1) Upon receipt of an application under 

section 14, the Designated Court shall issue notice to— 

(a) the deposit taker; and  

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(b) any person whose property is attached under section 14,  

to  show  cause,  within  a  period  of  thirty  days  from  the  date  of  issue  of  notice,  as  to  why  the  order  of 
attachment should not be made absolute and the properties so attached be sold. 

 (2)  The  Designated  Court  shall  also  issue  notice  to  all  other  persons  represented  to  it  as  having  or 
being likely to claim any interest or title in the property, to appear on the same date as persons referred to 
in sub-section (1) to raise objections, if they so desire, to the attachment of the property. 

(3) The Designated Court shall, after adopting such procedure as may be prescribed, pass an order—  

(a) making the provisional order of attachment absolute; or 

(b) varying it by releasing a portion of the property from attachment; or  

(c) cancelling the provisional order of attachment, and in case of an order under clause (a) or clause 
(b), direct the Competent Authority to sell the property so attached by public auction or, if necessary, 
by private sale and realise the sale proceeds.  

(4)  The  Designated  Court  shall  not,  in  varying  or  cancelling  the  provisional  order  of  attachment, 

release any property from attachment, unless it is satisfied that—  

(a) the deposit taker or the person referred to in sub-section (1) has interest in such property; and  

(b)  there  shall  remain  an  amount  or  property  sufficient  for  repayment  to  the  depositors  of  such 

deposit taker.  

(5)  The  Designated  Court  shall  pass  such  order  or  issue  such  direction  as  may  be  necessary  for  the 

equitable distribution among the depositors of the money attached or realised out of the sale.  

(6)  The  Designated  Court  shall  endeavour  to  complete  the  proceedings  under  this  section  within  a 

period  of  one  hundred  and  eighty  days  from  the  date  of  receipt  of  the  application  referred  to  in                
sub-section (1). 

16. Attachment of property of mala fide transferees.—(1) Where the Designated Court is satisfied 
that there is a reasonable cause for believing that the deposit taker has transferred any property otherwise 
than  in  good  faith  and  not  for  commensurate  consideration,  it  may,  by  notice, require any  transferee  of 
such property, whether or not he received the property directly from the said deposit taker, to appear on a 
date to be specified in the notice and show cause why so much of the transferee’s property as is equivalent 
to the proper value of the property transferred should not be attached. 

(2)  Where  the  said  transferee  does  not  appear  and  show  cause  on  the  specified  date  or  where  the 
Designated Court is satisfied that the transfer of the property to the said transferee was not a bona fide 
transfer  and  not  for  commensurate  consideration,  it  shall  order  the  attachment  of  so  much  of  the  said 
transferee’s property as in its opinion is equivalent to the proper value of the property transferred. 

 17. Payment in lieu of attachment.—(1) Any deposit taker or a person referred to in                   sub-
section (1) of section 15, or transferee referred to in section 16 whose property is about to be attached or 
has been provisionally attached under this Act, may, at any time before the confirmation of attachment, 
apply  to  the  Designated  Court  for  permission  to  deposit  the  fair  value  of  the  property  in  lieu  of 
attachment.  

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(2) While allowing the deposit taker or person or transferee referred to in sub-section (1) to make the 
deposit under sub-section (1), the Designated Court may order such deposit taker or person or transferee 
to pay any sum towards costs as may be applicable. 

18. Powers of Designated Court. — (1) The Designated Court shall exercise the following powers, 

namely:—  

(a) power to approve the statement of dues of the deposit taker due from various debtors;  

(b) power to assess the value of the assets of the deposit taker and finalise the list of the depositors 

and their respective dues; 

(c) power to direct the Competent Authority to take possession of any assets belonging to or in the 
control of the deposit taker and to sell, transfer or realise the attached assets, either by public auction or 
by private sale as it deems fit depending upon the nature of assets and credit the sale proceeds thereof 
to its bank account; 

(d)  power  to  approve  the  necessary  expenditure  to  be  incurred  by  the  Competent  Authority  for 

taking possession and realisation of the assets of the deposit taker; 

(e)  power  to  pass  an  order  for  full  payment  to  the  depositors  by  the  Competent  Authority  or  an 
order for proportionate payment to the depositors in the event, the money so realised is not sufficient to 
meet the entire deposit liability; 

(f) power to direct any person, who has made profit or averted loss by indulging in any transaction 
or  activity  in  contravention  of  the  provisions  of  this  Act,  to  disgorge  an  amount  equivalent  to  the 
wrongful gain made or loss averted by such contravention; and 

(g) power to pass any other order which the Designated Court deems fit for realisation of assets of 
the deposit taker and for repayment of the same to the depositors of such deposit taker or on any other 
matter or issue incidental thereto.  

(2) On the application of any person interested in any property attached and vested in the Competent 
Authority under this Act and after giving such Competent Authority an opportunity of being heard, make 
such order as the Designated Court considers just and reasonable for—  

(a)  providing  from  such  of  the  property  attached  and  vested  in  the  Competent  Authority  as  the 
applicant claims an interest in, such sums as may be reasonably necessary for the maintenance of the 
applicant  and  of  his  family,  and  for  expenses  connected  with  the  defence  of  the  applicant  where 
criminal proceedings have been initiated against him in the Designated Court under this Act; or 

(b)  safeguarding,  so  far  as  may  be  practicable,  the  interest  of  any  business  affected  by  the 

attachment. 

Explanation.—For  the  purposes  of  this  section,  the  expression  “deposit  taker”  includes  the 
directors, promoters, managers or members of said establishment or any other person whose property 
or assets have been attached under this Act.  

19.  Appeal to High  Court.  —  Any  person  including  the  Competent  Authority,  if aggrieved  by  any 
final order of the Designated Court under this Chapter, may appeal to the High Court, within a period of 
sixty days from the date of such order: 

12 

 
Provided that the High Court may entertain the appeal after the expiry of the said period of sixty days, 

if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.  

Explanation.—The expression “High Court” means the High Court of a State or Union territory where 

the Designated Court is situated. 

20. Power of Supreme Court to transfer cases. — (1) Whenever it is made to appear to the Supreme 
Court that there is a default in any deposit scheme or deposit schemes of the nature referred to in section 
30,  the  Supreme  Court  may,  by  an  order,  direct  that  any  particular  case  be  transferred  from  one 
Designated Court to another Designated Court. 

(2)  The  Supreme  Court  may  act  under  this  section  only  on  an  application  filed  by  the  Competent 

Authority or any interested party, and every such application shall be supported by an affidavit. 

(3)  Where  an  application  for  the  exercise  of  the  powers  conferred  by  this  section  is  dismissed,  the 
Supreme Court may, if it is of opinion that the application was frivolous or vexatious, order the applicant 
to pay by way of compensation to any person who has opposed the application such sum not exceeding 
fifty thousand rupees as it may consider appropriate in the circumstances of the case. 

CHAPTER VI 

OFFENCES AND PUNISHMENTS 

21.  Punishment  for  contravention  of  section  3.  —  (1)  Any  deposit  taker  who  solicits  deposits  in 
contravention of section 3 shall be punishable with imprisonment for a term which shall not be less than 
one year but which may extend to five years and with fine which shall not be less than two lakh rupees but 
which may extend to ten lakh rupees. 

(2)  Any  deposit  taker  who  accepts  deposits  in  contravention  of  section  3  shall  be  punishable  with 
imprisonment for a term which shall not be less than two years but which may extend to seven years and 
with fine which shall not be less than three lakh rupees but which may extend to ten lakh rupees. 

(3) Any deposit taker who accepts deposits in contravention of section 3 and fraudulently defaults in 
repayment of such deposits or in rendering any specified service, shall be punishable with imprisonment 
for a term which shall not be less than three years but which may extend to ten years and with fine which 
shall  not  be  less  than  five  lakh  rupees  but  which  may  extend  to  twice  the  amount  of  aggregate  funds 
collected from the subscribers, members or participants in the Unregulated Deposit Scheme. 

Explanation.—For the purposes of this Act,— 

(i) the expression “fraudulently” shall have the same meaning as assigned to it in section 25 of the 

Indian Penal Code (45 of 1860); 

(ii) where the terms of the Deposit Scheme are entirely impracticable or unviable, the terms shall be 

relevant facts showing an intention to defraud. 

22. Punishment for contravention of section 4. — Any deposit taker who contravenes the provisions 
of section 4 shall be punishable with imprisonment for a term which may extend to seven years, or with 
fine  which  shall  not  be  less  than  five  lakh  rupees  but  which  may  extend  to  twenty-five  crore  rupees  or 
three times the amount of profits made out of the fraudulent default referred to in said section, whichever 
is higher, or with both.  

13 

 
23.  Punishment  for  contravention  of  section  5.  —Any  person  who  contravenes  the  provisions  of 
section  5  shall  be  punishable  with  imprisonment  for  a  term  which  shall  not  be  less  than  one  year  but 
which may extend to five years and with fine which may extend to ten lakh rupees.  

24.  Punishment  for  repeat  offenders.  —Whoever  having  been  previously  convicted  of  an  offence 
punishable  under  this  Chapter,  except  the  offence  under  section  26,  is  subsequently  convicted  of  an 
offence shall be punishable with imprisonment for a term which shall not be less than five years but which 
may extend to ten years and with fine which shall not be less than ten lakh rupees but which may extend 
to fifty crore rupees.  

25. Offences by deposit takers other than individuals. — (1) Where an offence under this Act has 
been committed by a deposit taker other than an individual, every person who, at the time the offence was 
committed, was in charge of, and was responsible to, the deposit taker for the conduct of its business, as 
well as the deposit taker, shall be deemed to be guilty of the offence and shall be liable to be proceeded 
against and punished accordingly.  

(2)  Nothing  contained  in  sub-section  (1)  shall  render  any  such  person  liable  to  any  punishment 
provided  in  this  Act,  if  he  proves  that  the  offence  was  committed  without  his  knowledge  or  that  he 
exercised all due diligence to prevent the commission of such offence.  

(3) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been 

committed by a deposit taker other than an individual, and it is proved that the offence—  

(a) has been committed with the consent or connivance of; or 

(b) is attributable to any neglect on the part of any director, manager, secretary, promoter, partner, 

employee or other officer of the deposit taker,  

such person shall also be deemed to be guilty of that offence and shall be liable to be proceeded against 
and punished accordingly.  

26.  Punishment  for  contravention  of  section  10.  —  Whoever  fails  to  give  the  intimation  required 
under sub-section (1) of section 10 or fails to furnish any such statements, information or particulars as 
required under sub-section (2) of that section, shall be punishable with fine which may extend to five lakh 
rupees.  

27. Cognizance of offences.— Notwithstanding anything contained in section 4, no Designated Court 
shall take cognizance of an offence punishable under that section except upon a complaint made by the 
Regulator:  

Provided that the provisions of section 4 and this section shall not apply in relation to a deposit taker 

which is a company. 

CHAPTER VII 

INVESTIGATION, SEARCH AND SEIZURE 

28. Offences to be cognizable and non-bailable. —Notwithstanding anything contained in the Code 
of  Criminal  Procedure,  1973  (2  of  1974)  every  offence  punishable  under  this  Act,  except  the  offence 
under section 22 and section 26, shall be cognizable and non-bailable. 

14 

 
29.  Competent  Authority  to  be  informed  of  offences.  —The  police  officer  shall,  on  recording 
information  about  the  commission  of  an  offence  under  this  Act,  inform  the  same  to  the  Competent 
Authority. 

30. Investigation of offences by Central Bureau of Investigation. — (1) On receipt of information 
under section 29 or otherwise, if the Competent Authority has reason to believe that the offence relates to 
a deposit scheme or deposit schemes in which— 

(a) the depositors, deposit takers or properties involved are located in more than one State or Union 

territory in India or outside India; and 

(b) the total value of the amount involved is of such magnitude as to significantly affect the public 

interest, 

the Competent Authority shall refer the matter to the Central Government for investigation by the Central 
Bureau of Investigation. 

(2) The reference made by the Competent Authority under sub-section (1) shall be deemed to be with 
the consent of the State Government under section 6 of the Delhi Special Police Establishment Act, 1946 
(25 of 1946). 

(3)  On  the  receipt  of  the  reference  under  sub-section  (1),  the  Central  Government  may  transfer  the 
investigation  of  the  offence  to  the  Central  Bureau  of  Investigation  under section  5  of  the  Delhi  Special 
Police Establishment Act, 1946 (25 of 1946). 

31.  Power  to  enter,  search  and  seize  without  warrant.  —  (1)  Whenever  any  police  officer,  not 
below the rank of an officer in-charge of a police station, has reason to believe that anything necessary for 
the purpose of an investigation into any offence under this Act may be found in any place within the limits 
of the police station of which he is in-charge, or to which he is attached, such officer may, with the written 
authorisation of an officer not below the rank of Superintendent of Police, and after recording in writing 
so far as possible, the thing for which the search is to be made and subject to the rules made in this behalf, 
authorise any officer subordinate to him,— 

(a) to enter and search any building, conveyance or place, between sunrise and sunset, which he has 
reason to suspect is being used for purposes connected with the promotion or conduct of any deposit 
taking scheme or arrangement in contravention of the provisions of this Act; 

(b) in case of resistance, to break open any door and remove any obstacle to such entry, if necessary 
by force, with such assistance as he considers necessary, for exercising the powers conferred by clause 
(a);  

(c) to seize any record or property found as a result of the search in the said building, conveyance or 
place, which are intended to be used, or reasonably suspected to have been used, in connection with 
any such deposit taking scheme or arrangement in contravention of the provisions of this Act; and  

(d)  to  detain  and  search,  and  if  he  thinks  proper,  take  into  custody  and  produce  before  any 
Designated  Court  any  such  person  whom  he  has  reason  to  believe  to  have  committed  any  offence 
punishable under this Act:  

Provided  that  if  such  officer  has  reason  to  believe  that  the  said  written  authorisation  cannot  be 
obtained without affording opportunity for the concealment of evidence or facility for the escape of an 

15 

 
offender, he may, without the said written authorisation, enter and search such building, conveyance or 
place, at any time between sunset and sunrise after recording the grounds in writing. 

(2) Where it is not practicable to seize the record or property, the officer authorised under sub-section 
(1),  may  make  an  order  in  writing  to  freeze  such  property,  account,  deposits  or  valuable  securities 
maintained by any deposit taker about which a complaint has been made or credible information has been 
received or a reasonable suspicion exists of their having been connected with the promotion or conduct of 
any deposit taking scheme or arrangement in contravention of the provisions of this Act and it shall be 
binding on the concerned bank or financial or market establishment to comply with the said order: 

Provided  that  no  bank  or  financial  or  market  establishment  shall  freeze  such  account,  deposit  or 
valuable  securities,  for  a  period  beyond  thirty  days  unless  the  same  is  authorised  by  the  order  of  the 
Designated Court: 

Provided  further  that,  if  at  any  time,  it  becomes  practicable  to  seize  the  frozen  property,  the  officer 

authorised under sub-section (1) may seize such property.  

Explanation.—For the purposes of this section, the expressions,— 

(i)  “freezing  of  account”  shall  mean  that  no  transaction,  whether  deposit  or  withdrawal  shall  be 

allowed in the said account; and  

(ii)  “freezing  of  property”  shall  mean  that  no  transfer,  conversion,  disposition  or  movement  of 

property shall be allowed.  

(3) Where an officer takes down any information in writing or records grounds for his belief or makes 
an order in writing under sub-section (1) or sub-section (2), he shall, within a time of seventy-two hours 
send  a  copy  thereof  to  the  Designated  Court  in  a  sealed  envelope  and  the  owner  or  occupier  of  the 
building, conveyance or place shall, on application, be furnished, free of cost, with a copy of the same by 
the Designated Court.  

(4) All searches, seizures and arrests under this section shall be made in accordance with the provisions 

of the Code of Criminal Procedure, 1973 (2 of 1974). 

32. Application of Code of Criminal Procedure, 1973 to proceedings before Designated Court. — 
(1)  The  Designated  Court  may  take  cognizance  of  offences  under  this  Act  without  the  accused  being 
committed to it for trial. 

(2) Save as otherwise provided in section 31, the provisions of the Code of Criminal Procedure, 1973 

(2 of 1974) shall apply—  

(a) to all arrests, searches and seizures made under this Act; 

(b) to the  proceedings  under this  Act  and  for the purposes  of the  said provisions,  the  Designated 
Court shall be deemed to be a Court of Session and the persons conducting the prosecution before the 
Designated Court, shall be deemed to be Public Prosecutors. 

16 

 
 
 
CHAPTER VIII 

MISCELLANEOUS 

33.  Publication  of  advertisement  of  Unregulated  Deposit  Scheme.  —  Where  any  newspaper  or 
other  publication  of  any  nature,  contains  any  statement,  information  or  advertisement  promoting, 
soliciting deposits for, or inducing any person to become a member of any Unregulated Deposit Scheme, 
the appropriate Government may direct such newspaper or publication to publish a full and fair retraction, 
free  of  cost,  in the  same  manner  and  in  the  same  position in  such  newspaper or  publication  as  may  be 
prescribed. 

34. Act to have overriding effect.— Save as otherwise expressly provided in this Act, the provisions 
of  this  Act shall  have  effect  notwithstanding  anything  contained  in  any  other  law  for  the  time  being  in 
force, including any law made by any State or Union territory. 

35. Application of other laws not barred. — The provisions of this Act shall be in addition to, and 

not in derogation of, the provisions of any other law for the time being in force. 

36. Protection of action taken in good faith. —No suit, prosecution or other legal proceedings shall 
lie  against  the  appropriate  Government  or  the  Competent  Authority  or  any  officer  of  the  appropriate 
Government for anything which is in good faith done or intended to be done under this Act or the rules 
made thereunder. 

37.  Power  of  Central  Government  to  make  rules.  —  (1)  The  Central  Government  may,  by 

notification, make rules for carrying out the provisions of this Act. 

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide 

for all or any of the following matters, namely:— 

(a) the information and other particulars to be taken into consideration before issuing an order, and 

the manner of attachment, under sub-section (3) of section 7;  

(b) the information to be shared under sub-section (2) of section 9;  

(c) the form and manner in which and the time within which the intimation shall be given under 

sub-section (1) of section 10;  

(d) the particulars contained in the application to be filed by the Competent Authority before the 

Designated Court under sub-section (1) of section 14;  

(e) the procedure to be adopted by the Designated Court before issuing an order under  sub-section 

(3) of section 15;  

(f) rules under sub-section (1) of section 31; 

(g) the manner of publication of advertisement under section 33; and  

(h) any other matter which is required to be, or may be, prescribed. 

38. Power of State Government, etc., to make rules. — (1) The State Government or Union territory 
Government, as the case may be, in consultation with the Central Government, by notification, make rules 
for carrying out the provisions of this Act. 

17 

 
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide 

for all or any of the following matters, namely:— 

(a) ceiling for self-help groups under clause (j) of sub-section (4) of section 2; 

(b) purpose and ceiling under clause (k) of sub-section (4) of section 2;  

(c) the manner of provisional attachment of property by the Competent Authority under sub-section 

(3) of section 7;  

(d) other matters under clause  

(f) of sub-section (4) of section 7;  

(e) the rules relating to impounding and custody of records under sub-section (8) of section 7; and 

(f) any other matter which is required to be, or may be, prescribed. 

39. Laying of rules. — (1) Every rule made by the Central Government under this Act shall be laid, as 
soon as may be after it is made, before each House of Parliament, while it is in session, for a total period 
of  thirty  days  which  may  be  comprised  in  one  session,  or  in  two  or  more  successive  sessions,  and  if, 
before the expiry of the session immediately following the session or the successive sessions aforesaid, 
both Houses agree in making any modification in the rule, or both Houses agree that the rule should not 
be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case 
may be; so, however, that any such modification or annulment shall be without prejudice to the validity of 
anything previously done under that rule. 

(2) Every rule made by a State Government or the Union territory Government, as the case may be, 
shall be laid, as soon as may be after it is made, before each House of the State Legislature or the Union 
territory  Legislature,  as  the  case  may  be,  where  it  consists  of  two  Houses,  or  where  such  Legislature 
consists of one House, before that House. 

40.  Power  to  amend  First  Schedule.  —  (1)  The  Central  Government  may,  having  regard  to  the 
objects of this Act, and if it considers  necessary or expedient so to do, by notification, add to, or as the 
case  may  be,  omit  from  the  First  Schedule,  any  scheme  or  arrangement,  and  on  such  addition,  or 
omission, such scheme or arrangement shall become, or cease to be, a Regulated Deposit Scheme, as the 
case may be. 

(2)  A  copy  of  every  notification issued  under this  section  shall,  as soon  as  may  be  after  it  has  been 

issued, be laid before each House of Parliament. 

41. Act not to apply certain deposits. —The provisions of this Act shall not apply to deposits taken 

in the ordinary course of business. 

42. Amendment to certain enactments. —The enactments specified in the Second Schedule shall be 

amended in the manner specified therein. 

43. Power to remove difficulties. — (1) If any difficulty arises in giving effect to the provisions of 
this Act, the Central Government may, by order published in the Official Gazette, make such provisions, 
not  inconsistent  with  the  provisions  of  this  Act,  as  may  appear  to  it  to  be  necessary  for  removing  the 
difficulty:  

18 

 
Provided that no such order shall be made under this section after the expiry of three years from the 

commencement of this Act.  

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each 

House of Parliament. 

44.  Repeal  and  saving.  —  (1)  The  Banning  of  Unregulated  Deposit  Schemes  Ordinance,  2019,  is 

hereby repealed. 

(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance, shall be 

deemed to have been done or taken under this Act. 

19 

 
 
 
 
 
 
THE FIRST SCHEDULE 

[See section 2 (15)] 

REGULATED DEPOSIT SCHEMES 

(1) The Regulator and Regulated Deposit Scheme refers to the regulators and schemes and 

arrangements listed in the following Table, namely:— 

TABLE 

Sl. No. 

1. 

(1) 

Regulator 

(2) 

The Securities and Exchange 
Board of India 

Regulated Deposit Scheme 

(3) 
(i) Any scheme or an arrangement 
[as defined under section 11AA of 
the Securities and Exchange Board 
of India Act, 1992 (15 of 1992)] 
launched, sponsored or carried out 
by a Collective Investment 
Management Company registered 
with the Securities and Exchange 
Board of India under the Securities 
and Exchange Board of India 
(Collective Investment Scheme) 
Regulations, 1999. 
(ii) Any scheme or an arrangement 
registered with the Securities and 
Exchange Board of India under the 
Securities and Exchange Board of 
India (Alternative Investment 
Funds) Regulations, 2012. 
(iii) Any scheme or an 
arrangement, pursuant to which 
funds are managed by a portfolio 
manager, registered under the 
Securities and Exchange Board of 
India (Portfolio Managers) 
Regulations, 1993. 
(iv) Any scheme or an arrangement 
regulated under the Securities and 
Exchange Board of India (Share 
Based Employee Benefits) 
Regulations, 2014 or providing for 
employee benefits as permitted 
under the Companies Act, 2013 (18 
of 2013). 
(v) Any other scheme or an 
arrangement registered under the 
Securities and Exchange Board of 
India Act, 1992 (15 of 1992), or the 
regulations made thereunder. 

20 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 

(2) 

2. 

The Reserve Bank of India 

3. 

4. 

The Insurance 
Regulatory and 
Development 
Authority of India 

The State Government 
or Union territory 
Government 

21 

(3) 
(vi) Any amount received as 
contributions in the nature of 
subscriptions to a mutual fund 
registered with Securities and 
Exchange Board of India under the 
Securities and Exchange Board of 
India (Mutual Funds) Regulations, 
1996. 
(i) Any scheme under which 
deposits are accepted by 
Non-Banking Financial Companies 
as defined in clause (f) of section 
45-I of the Reserve Bank of India 
Act, 1934 (2 of 1934) and 
registered with the Reserve Bank 
of India; or any other scheme or an 
arrangement registered under the 
Reserve Bank of India Act, 1934. 
(ii) Any scheme or an arrangement 
under which funds are accepted by 
individuals or entities engaged as 
Business Correspondents and 
Facilitators by banks subject to the 
guidelines and circulars issued by 
the Reserve Bank of India from 
time to time. 
(iii) Any scheme or an arrangement 
under which funds are received by 
a system provider operating as an 
authorised payment system under 
the Payment and Settlement 
Systems Act, 2007 (51 of 2007). 
(iv) Any other scheme or an 
arrangement regulated under the 
Reserve Bank of India Act, 1934 (2 
of 1934), or the guidelines or 
circulars of the Reserve Bank of 
India 
A contract of insurance pursuant to 
a certificate of 
registration obtained in accordance 
with the Insurance 
Act, 1938 (4 of 1938). 
(i) Any scheme or an arrangement 
made or offered by a co-operative 
society registered under the Co-
operative Societies Act, 1912 (2 of 
1912) or a society being a society 
registered or deemed to be 
registered under any law relating to 
co-operative societies for the time 
being in force in any State or 
Union territory 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 

(2) 

5. 

6. 

7. 

8. 

9. 

The National 
Housing Bank 

The Pension Fund Regulatory and 
Development Authority 

The Employees' Provident Fund 
Organisation 

The Central Registrar, Multi-State 
Co- operative Societies 

The Ministry of Corporate Affairs, 
Government of India 

(3) 
(ii) Any scheme or an arrangement 
commenced or conducted as a chit 
business with the previous sanction 
of the State Government in 
accordance with the provisions of 
the Chit Funds Act, 1982 (40 of 
1982). 
(iii) Any scheme or an arrangement 
regulated by any enactment 
relating to money lending which is 
for the time being in force in any 
State or Union territory. 
(iv) Any scheme or an arrangement 
by a prize chit or money circulation 
scheme under section 11 of the 
Prize Chits and Money Circulation 
Schemes (Banning) Act, 1978 (43 
of 1978). 
Any scheme or an arrangement for 
acceptance of deposits registered 
under the National Housing Bank 
Act, 1987 (53 of 1987). 
Any scheme or an arrangement 
under the Pension Fund Regulatory 
and Development Authority Act, 
2013 (23 of 2013). 

Any scheme, Pension Scheme or 
Insurance Scheme framed under 
the Employees' Provident Fund and 
Miscellaneous Provisions Act, 
1952 ( 19 of 1952). 
Any scheme or an arrangement for 
acceptance of deposits from voting 
members by a Multi-State Co-
operative Society registered under 
the Multi-State Co-operative 
Societies Act, 2002 (39 of 2002). 
(i) Deposits accepted or permitted 
under the provisions of Chapter V 
of the Companies Act, 2013 (18 of 
2013). 
(ii) Any scheme or an arrangement 
under which deposits are accepted 
by a company declared as a Nidhi 
or a Mutual Benefit Society under 
section 406 of the Companies Act, 
2013 (18 of 2013). 

(2) The following shall also be treated as Regulated Deposit Schemes under this Act, namely:—  

(a) deposits accepted under any scheme or an arrangement registered with any regulatory body in India 

constituted or established under a statute; and  

(b) any other scheme as may be notified by the Central Government under this Act. 

22 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE SECOND SCHEDULE 

(See section 42) 

AMENDMENTS TO CERTAIN ENACTMENTS 

PART I 

AMENDMENT TO THE RESERVE BANK OF INDIA 

ACT, 1934 

Amendment  of  section  45-I  of  Act  2  of  1934.In  the  Reserve  Bank  of  India  Act,  1934,  in                

section 45-I, in clause (bb), after Explanation II, the following Explanation shall be inserted, namely:— 

“Explanation III.—The amounts accepted by a co-operative society from the members or shareholders, 
by  whatever  name  called,  but  excluding  the  amounts  received  as  share  capital,  shall  be  deemed  to  be 
deposits  for  the  purposes  of  this  clause,  if  such  members  or  shareholders  are  nominal  or  associate 
members,  by  whatever  name  called,  who  do  not  have  full  voting  rights  in  the  meetings  of  such  co-
operative society.”. 

PART II 

AMENDMENTS TO THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 

In the Securities and Exchange Board of India Act, 1992,— 

Amendment  of  section  11  of  Act  15  of  1992.  —  (i)  in  section  11,  in  sub-section  (4),  for                       

clause (e), the following clause shall be substituted, namely:— 

“(e)  attach,  for  a  period  not  exceeding  ninety  days,  bank  accounts  or  other  property  of  any 
intermediary or any person associated with the securities market in any manner involved in violation of 
any of the provisions of this Act, or the rules or the regulations made thereunder: 

Provided  that  the  Board  shall,  within  ninety  days  of  the  said  attachment,  obtain  confirmation  of  the 
said attachment from the Special Court, established under section 26A, having jurisdiction and on such 
confirmation,  such  attachment  shall  continue  during  the  pendency  of  the  aforesaid  proceedings  and  on 
conclusion of the said proceedings, the provisions of section 28A shall apply: 

Provided further that only property, bank account or accounts or any transaction entered therein, so far 
as it relates to the proceeds actually involved in violation of any of the provisions of this Act, or the rules 
or the regulations made thereunder shall be allowed to be attached.”; 

(ii) in section 28A, after Explanation 3, the following Explanation shall be inserted, namely:— 

“Explanation  4.—The  interest  referred  to  in  section  220  of  the  Income-tax  Act,  1961  shall 

commence from the date the amount became payable by the person.”. 

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PART III 

AMENDMENT TO THE MULTI-STATE CO-OPERATIVE SOCIETIES ACT, 2002 

Amendment of section 67 of Act 39 of 2002. —In the Multi-State Co-operative Societies Act, 2002, in 

section 67, in sub-section (1),— 

(a) after the words “receive deposits”, the words “from its voting members” shall be inserted; 

(b) the following Explanation shall be inserted, namely:— 

“Explanation.—For the removal of doubts, it is hereby clarified that a multi-State co-operative society 

shall not be entitled to receive deposits from persons other than voting members.”. 

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