Relevance : GS Paper III ( Economy)
President promulgated the Banning of Unregulated Deposit Schemes Ordinance.
The ordinance bars all deposit schemes in the country that are not officially registered with the government.
How will the ordinance help?
- Savings of low-income Indian households may get some protection now.
- Greater legal protection can be offered for those depositors with inadequate financial literacy.
Provisions of the ordinance
- creation of a central repository of all deposit schemes under operation
- compensation to be offered to victims
Popular deposit schemes
- these have helped in saving for people in the unorganised sector.
- These were not regulated by the govt.
- These unregulated schemes have been misused by some miscreants
The challenge posed by the ordinance
It dissuades depositors from conducting the necessary due diligence before choosing to deposit their money.
Way forward
- proper implementation of the ordinance is needed.
- savings of low-income households should be protected.
- there must be checks against persons in power misusing the new rules
