New Delhi, Mar 24 (PTI) A majority of the state/UT governments have so far shown a lax and nonchalant attitude towards the implementation of rules related to the Banning of Unregulated Deposit Schemes Act, 2019, a parliamentary panel noted.

"The tardy pace of implementation is disheartening," Committee on Subordinate Legislation headed by senior Congress leader Partap Singh Bajwa said in its report on Wednesday.

Competent Authority has a very significant and indispensable role in the implementation of Act, whose main functions include attachment of properties/assets of operators of illegal schemes, and subsequent realisation of assets for repayment to depositors, the report said. 

The Banning of Unregulated Deposit Schemes Act, 2019, which came into force on February 2019, provides for a comprehensive mechanism to ban the unregulated deposit schemes, other than deposits taken in the ordinary course of business, and to protect the interest of depositors.

The Act also aims to make unregulated deposit schemes illegal ab initio, before the scheme could take money and dupe people.  

The committee recommended that the Department of Financial Services (DFS) under the Finance Ministry should aggressively pursue the matter with the state/UT governments.

It also asked the secretary, DFS to request the Union Minister of Finance, if necessary,  to use her good offices to impress upon the state/UT governments their responsibilities under the Act and to notify their respective Competent Authorities as soon as possible. 

The committee in report said that in case an Act of Parliament confers a certain obligation or responsibility on the state governments to implement the Act or requires them to frame subordinate legislation to carry out the provisions of the Act, then the state governments should adhere to the obligation or responsibility conferred on them so that the legislation may be implemented in full letter and spirit. 

This delay in taking action on the part of state governments sometimes ends up defeating the main purpose of the legislation enacted by the Parliament, it said. 

The committee raised few concerns regarding the law impacting legitimate business transactions that arise in the normal course, which could be construed as illicit deposits under this Act. 

The ministry said that such deposits done in the normal course of business are exempted under the Act.  

The committee also recommended that the Act or the Rules may be suitably amended to incorporate provision providing for expertise, experience and domain knowledge in dealing with financial frauds or crimes, in order to be eligible for appointment as Competent Authority.

The report said it has suggested that there should be a national level body or agency, which can investigate and follow up such financial frauds independently without any pressure from the central or state governments. 

The composition and terms and conditions of service of officials manning such a body may be framed in such a way that they are insulated from any political or administrative pressures and they may carry out their mandate without any fear or favour, it said.  

The committee noted that celebrities with "deep pockets" charge huge sums of money, often in lakhs and crores, in lieu of their endorsements of such illicit scheme, the fine under this Section needs to be imposed heavily so as to serve as a credible deterrence. 

"The terms of endorsement contract and the nature and extent of the fraud in scheme may also be taken as relevant considerations while deciding on the exact amount of the fine to be imposed," it said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)