Lieutenant Governor Vinai Kumar Saxena on Monday approved the notification of ‘The Delhi Banning of Unregulated Deposit Schemes Rules, 2024’ by the Finance Department of the Government of the National Capital Territory of Delhi (GNCTD) in a bid to ensure that fraudulent schemes are not used by criminals to dupe hapless residents of their savings.
This initiative is in accordance with Section 38 of “The Banning of Unregulated Deposit Schemes Act, 2019.” The rules have special provisions for Self Help Groups as advised by the Ministry of Finance, Government of India (GoI) and Reserve Bank of India (RBI).
The Government of India had enacted the Banning of Unregulated Deposit Schemes Act, 2019, through a gazette notification dated July 31, 2019, to establish a comprehensive framework aimed at prohibiting unregulated deposit schemes, except those conducted in the ordinary course of business, thereby protecting the interests of depositors.
As per Section 38(1) of the Act, the State or Union Territory Government, in consultation with the Central Government, is required to issue rules to implement the provisions of the Act. “On October 29, 2020, the GoI forwarded copies of the Banning of Unregulated Deposit Schemes Rules, 2020, and the Karnataka Banning of Unregulated Deposit Schemes Rules, 2020, noting that the Karnataka Government had developed these rules in consultation with the Ministry of Finance, incorporating suggestions from the GoI. The GoI urged the GNCTD to expedite the formulation of its own rules under Section 38 of the Act,” a statement by the Raj Niwas said.
It added that in response, the Chit Fund Department drafted the Delhi Banning of Unregulated Deposit Schemes Rules, 2021, based on the rules established by the Karnataka Government. The statement said, “This draft was reviewed by the Law Department, which advised obtaining the opinion of the then Hon’ble Lieutenant Governor, as required by Clause (4) of Article 239AA of the Constitution. Approval from the Lieutenant Governor was secured before forwarding the file to the Central Government.”
The draft rules were subsequently submitted to the Ministry of Finance, GoI, under Section 38(1) of the Act. The Ministry provided minor drafting suggestions and confirmed that the proposed rules were in order, advising the GNCTD to finalize and notify them accordingly.
One notable suggestion from the GoI highlighted that Section 38(2) (a) in conjunction with Section 2(4) (j) of the Act allows the State Government to establish ceilings for Self-Help Groups (SHGs). The GoI cited the example of Tamil Nadu, which included a provision in its draft rules. While these provisions are enabling and not mandatory, the GNCTD was encouraged to consider including a corresponding provision if deemed necessary.
