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Depositors Bill awaits President’s nod

Claiming to be victims of sham deposit collection companies, Biswanath Biswal of Balasore and five others have filed a PIL seeking the court’s intervention for enforcement of the legislation that the Assembly had passed more than two years ago.

The Odisha Protection of Interests of Depositors (in Financial Establishments) Bill was passed on December 17, 2011. The Bill aims at protecting the interests of depositors in non-banking financial companies (NBFCs) and deposit acceptance activities of unincorporated bodies.

Though the government had submitted clarifications to the Centre regarding the Bill in April 2012, it is still pending President’s assent. “We will pursue it to ensure that the bill gets the President’s assent soon,” state development commissioner Jugal Kishore Mohapatra said.

“In the absence of the legislation, the state machinery is handicapped” to curb illegal activities of NBFCs and protect the interest of depositors, the PIL contends.

The bill has the provision of protecting the interest of depositors by way of return of their deposits with benefits and interests at the instance of the state government. The existing RBI Act does not have provision to protect the interest of common depositors.
Odisha Protection of Interest of depositors Bill 2011
“If the proposed legislation is introduced, the properties of fraud NBFCs and UIBs can be attached and liquidated to compensate the investors for their losses,” said ADG (crime branch) B K Sharma. “NBFCs and UIBs will have to obtain permission from collectors and SPs under the proposed provision,” Sharma said.

Currently, police prosecute erring NBFCs and UIBs under the Prize Chits and Money Circulation (Banning) Act, 1978, and provisions of the Indian Penal Code, which had a maximum punishment of three years. Sources said the new provision would invite imprisonment of 10 years.

The Bill also proposes that every finance firm in the state has to submit a report to the district collector and police chief, mentioning the details of its authority, location of the main office and address of all those responsible for the firm’s management within seven days of starting business.

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