On February 3, 2025, the Finance (Expenditure-II) Department of Delhi issued a comprehensive set of rules to enforce the Banning of Unregulated Deposit Schemes Act, 2019.
These rules, titled “The Delhi Banning of Unregulated Deposit Schemes Rules, 2024,” are aimed at curbing the operations of fraudulent deposit schemes and ensuring that violators face strict legal action. The new rules lay down detailed procedures for investigation, the handling of assets, and actions against offenders involved in such schemes.
Key Features of the New Rules:
Definitions:
The rules provide clarifications on important terms. For example:
- “Act” refers to The Banning of Unregulated Deposit Schemes Act, 2019 (21 of 2019).
- “Suo Moto cognizance” refers to an initiative taken by government agencies, courts, or other authorities based on their own assessment, without the need for a formal complaint.
Exemption for Self-Help Groups:
The rules clarify that individual contributions to Self-Help Groups (SHGs) will not be considered deposits under certain conditions. Specifically, periodical payments up to Rs. 50,000 per month (not exceeding Rs. 5,00,000 in a financial year) by an individual member will not fall under the scope of the Act. This is a positive move to protect genuine, small-scale financial activities from unnecessary legal scrutiny.
Powers and Duties of the Competent Authority:
The rules empower the Competent Authority to investigate and attach properties acquired by deposit takers through illicit means. If necessary, the Competent Authority can seek details from police authorities or the public through advertisements. The authorities are also empowered to attach additional properties if warranted by the investigation.
Key provisions include:
- Seeking information from police and public via notifications.
- Attachment of properties belonging to deposit takers involved in fraudulent schemes.
- Issuing notices in specific forms for initiating actions, requiring additional information, and securing personal attendance of deposit takers or witnesses.
Investigation and Inquiry:
The Competent Authority has a broad scope of action when conducting inquiries. Notices can be issued for initiating actions, requesting additional details, and summoning deposit takers or witnesses.
- Order of Provisional Attachment: This document will outline the details of complaints, investigation findings, and reasons for attaching properties.
- Final Proceedings: All proceedings must adhere to due process of law, ensuring fairness in the investigation and attachment of assets.
Handling Absconding Persons:
The rules make it clear that if a deposit taker or other individual involved in the scheme is absconding or evading arrest, the Competent Authority can inform the Designated Court for further action.
Seizure of Properties:
In cases where there is a risk that assets could be hidden or sold off to avoid legal consequences, the Competent Authority is authorized to direct the seizure or freezing of properties. This measure ensures that properties involved in fraudulent schemes remain intact for future legal proceedings.
Use of Legal and Professional Services:
To aid in the process of asset recovery, the Competent Authority can hire legal practitioners, chartered accountants, or forensic auditors. These experts will assist in securing and realizing the assets tied to fraudulent deposit schemes.
Empanelling Forensic and Digital Auditors:
The Delhi government is tasked with creating a panel of agencies and professionals for forensic auditing and digital audits. These auditors will help trace the money trail involved in unregulated deposit schemes, ensuring that the origins and flow of illicit funds are accurately assessed. The rules specify that these services will be utilized to conduct thorough investigations into financial transactions.
Valuation of Properties for Attachment:
Before releasing properties that have been attached under the Act, the Designated Court must obtain valuation reports from at least two empanelled valuers. This ensures that the fair value of the property is properly assessed before any actions are taken to release or sell it.
Conclusion:
The issuance of these new rules marks a crucial development in the fight against fraudulent deposit schemes. The detailed provisions, including stringent powers for asset attachment, investigation, and the involvement of professional auditors, underscore Delhi’s commitment to safeguarding financial integrity.
