Section 22 of The Banning of Unregulated Deposit Schemes Act, 2019
Any deposit taker who contravenes the provisions of section 4 shall be punishable with imprisonment for a term which may extend to seven years, or with fine which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of the fraudulent default referred to in said section, whichever is higher, or with both.
Summary
- This provision sets the criminal penalties for deposit takers who cheat people while operating within a legal, regulated scheme.
- It specifically punishes the act of fraudulent default, which means intentionally failing to repay money or provide services as promised.
- The jail time for breaking this rule can last for up to seven years.
- The fine for this crime must be at least five lakh rupees.
- The maximum fine can reach twenty five crore rupees or three times the profit made from the cheating, whichever amount is higher.
- This section applies even if the deposit scheme itself was registered and legal under other financial laws.
Practical examples
FAQ
1. What is the maximum jail time under Section 22 of the Banning of Unregulated Deposit Schemes Act, 2019?
Under Section 22 of the 2019 Act, a deposit taker who commits a fraudulent default in a regulated scheme can be sentenced to a maximum of seven years in prison.
2. Does Section 22 of the Banning of Unregulated Deposit Schemes Act, 2019 apply to illegal schemes?
No, Section 22 specifically punishes defaults in Regulated Deposit Schemes, which are schemes otherwise allowed by law.
3. What is the highest possible fine under Section 22 of the Banning of Unregulated Deposit Schemes Act, 2019?
The fine can go up to twenty five crore rupees or three times the profit made from the default, whichever is the higher amount.
4. Can a person be punished with both jail and a fine under Section 22 of the Banning of Unregulated Deposit Schemes Act, 2019?
Yes, the law states that the punishment can be imprisonment, or a fine, or both at the same time.
Test yourself
Q1.Under Section 22 of The Banning of Unregulated Deposit Schemes Act, 2019, which type of scheme must the deposit taker be operating for this specific punishment to apply?
Q2.If a deposit taker makes a profit of ten crore rupees by cheating a depositor, what is the maximum fine a court can impose under Section 22 of The Banning of Unregulated Deposit Schemes Act, 2019?
Q3.Under Section 22 of The Banning of Unregulated Deposit Schemes Act, 2019, what is the minimum fine that must be paid for a fraudulent default?
Q4.According to Section 22 of The Banning of Unregulated Deposit Schemes Act, 2019, what does a "fraudulent default" include besides failing to repay money?