Lieutenant Governor (LG) VK Saxena has approved the notification of “The Delhi Banning of Unregulated Deposit Schemes Rules, 2024” by the Finance Department of DelhiGovernment.

“This initiative is in accordance with Section 38 of The Banning of Unregulated Deposit Schemes Act, 2019. The rules have special provisions for Self Help Groups as advised by the Ministry of Finance, Government of India (GoI) and Reserve Bank of India (RBI). The notification of the rules will ensure that fraudulent schemes are not used by criminals to dupe hapless residents of their savings,” the LG office said on Monday.

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The GoI had enacted the Banning of Unregulated Deposit Schemes Act, 2019, through a gazette notification dated 31st July, 2019, to establish a comprehensive framework aimed at prohibiting unregulated deposit schemes, except those conducted in the ordinary course of business, thereby protecting the interests of depositors, it said.

As per Section 38(1) of the Act, the State or Union Territory government, in consultation with the Central government, is required to issue rules to implement the provisions of the Act.

On 29th October, 2020, the GoI forwarded copies of the Banning of Unregulated Deposit Schemes Rules, 2020, and the Karnataka Banning of Unregulated Deposit Schemes Rules, 2020, noting that the Karnataka government had developed these rules in consultation with the Ministry of Finance, incorporating suggestions from the Centre.

The Central government urged the Delhi government to expedite the formulation of its own rules under Section 38 of the Act.

In response, the Chit Fund Department drafted The Delhi Banning of Unregulated Deposit Schemes Rules, 2021, based on the rules established by the Karnataka Government. This draft was reviewed by the Law Department which advised obtaining the opinion of the then LG as required by Clause (4) of Article 239AA of the Constitution. Approval from the LG was secured before forwarding the file to the Central government.

“The draft rules were subsequently submitted to the Ministry of Finance, GoI, under Section 38(1) of the Act. The Ministry provided minor drafting suggestions and confirmed that the proposed rules were in order, advising the GNCTD to finalise and notify them accordingly,” the LG office said.