Unsecured Loans taken for business is not violation of “The Banning of Unregulated Deposit Scheme Ordinanc-2019” . Department of Financial Services (DFS), Government of India clarified by tweeting.

Unsecured Loans taken for business is not violation of "The Banning of Unregulated Deposit Scheme Ordinanc-2019" . Department of Financial Services (DFS), Government of India clarified by tweeting.

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Unsecured Loans taken for business is not violation of “The Banning of Unregulated Deposit Scheme Ordinanc-2019” . Department of Financial Services (DFS), Government of India clarified by tweeting.

Much awaited clarification is provided bow by tweeting it at Tweeter. Unsecured Loans taken for business is not violation of “The Banning of Unregulated Deposit Scheme Ordinanc-2019” . Department of Financial Services (DFS), Government of India clarified by tweeting.

With this, the hot controversy is settled and businessmen at large will get a sight of relief. 

Without this clarification, the amount of unsecured loans accepted from any persons other than relatives would have been treated as unregulated deposits which would have been subject to prosecutions and hefty monetary penalty as well.

Section 2(17) od the ordinance defines  “Unregulated Deposit Scheme” means a Scheme or an arrangement under which deposits are accepted or solicited by any deposit taker by way of business and which is not a Regulated Deposit Scheme. There is no  specific exemption to firms,and proprietorship firms. The schedule do gives power to Govt to exempt further schemes by notification. The ordinance bans deposit takes from accepting deposits .

What is “Deposit” is well elaborated in the definition clause of the ordinance. Under sub section 4 to section 2, 

 “Deposit” means an amount of money received by way of an advance or loan or in any other form, by deposit taker … … 

…….

……
 
.. 2(4)L … the amount received in the course of, or for the purpose of, business and bearing a genuine connection to such business including
 – advance towards supply of goods 
– advance agn immovable property as per agreement 
– dealership deposit 
– long term project of capital goods 
 
 

With the clarification by DFS, it is made aptly clear that the person who is not in the business of accepting deposits or running a deposit scheme and merely accepting loans in the course of business is not violation the new ordinance.

Under the new ordinance, all deposits are need to be categoried either as regulated or unregulated deposits only. There is no third categories of deposits. The definition if deposits is given in the ordinance and it excludes the deposits from relatives and deposits accepted in the course of business as referred above.

The snapshot of few related announcement by DFS is attached herewith for the benefit of readers: 

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