The Karnataka Government through gazette notification dated 19 February, 2021 has published the Karnataka Protection of Interest of Depositors in Financial Establishments (Amendment) Act, 2020. The Government or the District Magistrate is empowered to investigate any fraudulent transaction allegedly undertaken by or any properties and money believed to have been acquired by any financial establishment. The investigation can be undertaken Suo moto or based on the market intelligence reports or on receipt of any complaint.
Any Financial Establishment, which fraudulently defaults any repayment of deposit on maturity or fails to render service as assured against the deposit, the promoter, director, partner or manager responsible for conducting the affairs of such Financial Establishment, shall on conviction, be punished with:
- Imprisonment for a term not less than three years and which may extend to seven years;
- Fine which may extend to ten lakh rupees.