L-G Saxena approves banning of unregulated deposit schemes

L-G VK Saxena on Monday approved the notification of “The Delhi Banning of Unregulated Deposit Schemes Rules”, 2024, Raj Niwas officials said.

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The notification, initiated by the Finance Department of the Government of the National Capital Territory of Delhi (GNCTD), aligns with Section 38 of The Banning of Unregulated Deposit Schemes Act, 2019, enacted by the Central Government, they said.

An official said: “The notification of these rules will ensure that fraudulent schemes are not used by criminals to dupe hapless residents of their savings. Special provisions for self-help groups (SHGs), as advised by the Ministry of Finance and the Reserve Bank of India (RBI), have been incorporated to safeguard vulnerable sections.”

The Central Government had introduced the Banning of Unregulated Deposit Schemes Act in July 2019 to create a robust framework aimed at curbing unregulated deposit schemes, protecting depositors and penalising offenders.

Under Section 38(1), state and Union Territory governments were tasked with drafting rules in consultation with the Central Government to implement the Act.

In October 2020, the Ministry of Finance shared model rules developed by Karnataka as a reference for other states and Union Territories.

“The Delhi Government’s Chit Fund Department subsequently drafted the Delhi-specific rules in 2021. These were reviewed by the Law Department, approved by the then-LG, and forwarded to the Central Government for final suggestions,” officials said.

The finalised rules incorporate ceilings for SHGs, a recommendation encouraged by the Ministry of Finance. “As per inputs from the Women and Child Development (WCD) Department, a ceiling of Rs 50,000 per month and Rs 5,00,000 per financial year has been set for SHGs,” an official noted.

The incorporation of these ceilings aims to balance the encouragement of legitimate group savings initiatives with the protection of depositors from unregulated and risky financial schemes.

Officials added the extended timeline for notifying the rules, citing the process of stakeholder consultations and review. “We worked meticulously to ensure the rules align with the central framework and address local needs. Input from the Ministry of Finance, RBI and stakeholders like the WCD and Social Welfare Departments were crucial in shaping these rules,” an official from the L-G’s office said.