Banning of Unregulated Deposit Schemes Ordinance, 2019 applicable even if unsecured loan is taken by businessmen?

 

The Banning of Unregulated Deposit Schemes Ordinance, 2019 has been passed by virtue of which Unregulated Deposit Schemes have been banned with immediate effect. 

 

 

Also deposit takers have been prohibited from promoting, operating, advertising such Schemes.

 

 

A confusion  & question raised by many people is whether all sorts of loans and deposits are covered by the regulations or not ?

 

 

Whether business loans are als banned? Any amount taken as loans shall also be taken back?

 

 

 In the considered opinion of the aurhor, the context of the Ordinance is clear with respect to Unregulated Deposit Schemes only which has been defined as a Scheme or an arrangement under which deposits are accepted or solicited by a deposit taker by way of business and which is not a Regulated Deposit Scheme.

 

 

Firstly mere loans extended to companies or individuals are not necessarily under and Scheme or an arrangement. Moreover “by way of business” would mean during the course of a business of taking deposits and investing the same to give returns or a money lending business.

 

 

In our view, it is clear that this Ordinance does not prohibit all sorts of loans and advances.

 

It is purely “Unregulated DepositOrdinance” and not “Deposit Ordinance”.

 

 

 

The possibility of Other interpretation and contrary view cannot be denied. It will be better if finance ministry comes out with a detailed press release outlining the intended scope of the new ordinance.

 

 

 

Let us hope that the issue gets settled with the probable coming press release