In a significant move to curb financial fraud, Delhi LG VK Saxena has approved the long-awaited Delhi Banning of Unregulated Deposit Schemes Rules, 2024. With tailored provisions for Self-Help Groups and ceilings to protect vulnerable depositors, this marks a critical step in enforcing the 2019 Act across the capital.
BY PC Bureau
After a prolonged wait of over six years, Delhi has finally notified the rules under the Banning of Unregulated Deposit Schemes Act, 2019. This comes after the Central Government urged the GNCTD in 2020 to implement the Act locally.
Delhi Lieutenant Governor VK Saxena approved the notification of the Delhi Banning of Unregulated Deposit Schemes Rules, 2024, drafted by the GNCTD’s Finance Department. These rules align with Section 38 of the 2019 Act and include special provisions for Self-Help Groups (SHGs), based on recommendations from the Ministry of Finance and the Reserve Bank of India (RBI).
Key Highlights:
The rules aim to protect Delhi residents from fraudulent deposit schemes, often used by criminals to dupe people out of their savings.
Self-Help Groups are permitted to operate within specified financial ceilings: ₹50,000 per month and up to ₹5,00,000 annually.
This move marks a significant step in safeguarding depositors and ensuring compliance with federal directives.
The Journey to Notification
The Banning of Unregulated Deposit Schemes Act was gazetted on July 31, 2019, to provide a comprehensive legal framework prohibiting unregulated deposit schemes. Under Section 38(1) of the Act, State and Union Territory governments must establish rules in consultation with the Central Government.
In October 2020, the Central Government shared model rules and examples, including those from Karnataka, urging GNCTD to expedite its own draft. In response:
2021: The GNCTD’s Chit Fund Department drafted the Delhi-specific rules, modeled on Karnataka’s framework.
Law Review: The Law Department suggested seeking approval from the then Lieutenant Governor under Article 239AA of the Constitution.
Central Review: The draft was reviewed by the Ministry of Finance, which proposed minor refinements.
Inclusion of SHG Provisions
A notable recommendation from the Government of India and RBI was to set ceilings for Self-Help Groups, enabling small-scale deposit collection within specified limits. Following consultations with stakeholders, the Women and Child Development (WCD) Department suggested caps, which have been incorporated into the final rules.
The Way Forward
With the notification of these rules, Delhi takes a long-awaited step toward safeguarding its residents from unregulated deposit schemes. This move not only strengthens the legal framework but also reflects a collaborative effort among stakeholders to prioritize depositor protection.
