Financial misappropriation and cheating is one of the major illegal act that destroys the economy of any country. Money scams normally occurs in the name of various schemes of money investments or through different types of business. Most of the schemes have attractive offers that would attract big crowd but literally steal the money deposited by the depositor through fraudulent ways. In order to prevent the mushrooming of fraudulent deposit schemes, The banning of Unregulated Deposit Schemes Act 2019 (BUDS) was enacted on 31st July 2019 with 8 chapters, 44 sections and two schedules.
The act specifically states the unregulated schemes as any deposit made to the deposit taker in the name of any business but no business is carried out and such deposit schemes do not come under the category of Regulated deposit schemes specified in the column 3 of the first schedule of the Act. The objective of the act is to absolutely ban or prevent such unregulated deposit schemes that are not regulated by any Sector regulator or ministry. Section4 of the act states that any deposit taker receiving money on regulated deposit scheme shouldn’t commit any fraudulent default in the repayment of such deposit.
Chapter 3 of the act deals with the competent authority and designated courts to try the offences committed in contrary to the provisions of the act. Section 8 of the act states the institution of the designated courts presided by a Judge who is not below the rank of a District or sessions court Judge or Additional District and session court Judge. The Designated Courts has the authority to try offence charged under the Code of Criminal Procedure 1973 along with the provisions of this act if such an offence is charged on the accused. One of the important features of the act is if the Court or the competent authority finds the offence is committed by the deposit taker as unregulated deposit scheme order to attach the deposits held or to attach the property of him shall be issued. Chapter four of the act deals with the central Data base of the deposit takers by the authority designated by the Central Government and sharing of the details of the data base before the competent authority if any necessity occurs to do so.
Chapter six deals with the punishment for contraventions of section3, 4 and 5 for repeat offenders and for deposit takers other than individuals. The term of imprisonment varies from one year of imprisonment to an extension of seven years and fine of two lakhs rupees to fifty Crores depending on offences committed to the sections concerned in the Act.
The act clearly provides the provision that are highly effective in banning the fraudulent acts committed in accumulating money for Ponzi schemes. The act also has an impact as an effective mechanism in controlling all the unregulated illegal money depositing schemes with effective penalty or punishment to the offenders and on the other hand protecting the rights and interest of genuine legal small business transactions.