Government of India had on February 21, brought The Banning Of Unregulated Deposit Schemes Ordinance 2019 (UDS), to prevent duping of citizens in Ponzi schemes, chit funds and other unregulated deposits.
The recent ordinance by central government to regulate unregulated deposits will not affect the normal business activity.
Routine credits that businessmen offer to buyers will be outside the ambit of the ordinance, say local business leaders. Experts also feel that with upcoming general elections, it would not be possible for the government to put in place the machinery needed to enforce the ordinance.
Government of India had on February 21, brought The Banning Of Unregulated Deposit Schemes Ordinance 2019 (UDS), to prevent duping of citizens in Ponzi schemes, chit funds and other unregulated deposits. Rumours floated that loans taken by small businesses from unrelated parties and enterprises were also prohibited.
"We were flooded with requests from business to clear the air. This is because a lot of business happen on credit and advance payment. There were concerns that these will be prohibited. We asked Deloitte to give an expert opinion. We found that concerns were unfounded," said Jaimin Vasa, president of Gujarat Chamber of Commerce and Industry (GCCI).
Accordingly, the Ordinance shall restrict illicit deposit-taking activities and will protect the interests of deposit holders by providing a framework for redressal mechanism. Genuine business transactions should not be impacted as carve-outs have been made in the definition of the term – deposit. It remains to be seen how different state governments expand the receipt of various amounts that are not to be regarded as deposits under the UDS Ordinance. Law enforcement agencies have vast powers under the ordinance to investigate affairs of deposit takers.
"This ordinance is applicable only to those who are in the business of accepting deposits .This is not applicable to persons in regular business, that is, deposits taken for business. This means money taken for business as unsecured loans, hand loans, deposits, advance, etc. are not covered in the above ordinance," said a statement from Confederation of All India Traders (CAIT).
Tax practitioner Axat Vyas said that as per the Ordinance, a machinery to enforce provisions needs to be created. These include designated courts at district level and competent authority (not lower than a secretary). "With elections round the corner, there is a question mark whether the government will be able to create this structure. Unless the structure is in place how will the Ordinance be enforced," said Vyas. Lok Sabha passed the Bill on UDS on February 13. However, Rajya Sabha is yet to give it's nod, necessitating the Ordinance. If the Bill is not passed in Rajya Sabha within six months of its passage in Lok Sabha, it will lapse.
- The Banning Of Unregulated Deposits Bill 2019 has been passed by Lok Sabha
- It is not yet passed by Rajya Sabha and so the govt brought brought an ordinance
- Experts say, enforcement unlikely as machinery for the ordinance no where it sight
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "GCCI")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}