Chandigarh, June 1: The Punjab Cabinet, led by Captain Amarinder Singh, has made fraudulent practices by financial establishments a non-bailable offence, inviting up to 10 years of imprisonment, with provisions for attachment of properties.
The Cabinet has approved a new legislation to this effect, in a bid to safeguard the interests of depositors and curb fraudulent practices by financial establishments.
The Punjab Protection of Interests of Depositors’ (in Financial Establishments) Bill, 2018 has been brought in following several complaints of fraud received by the State Government, Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI), an official spokesperson said after the Cabinet meeting.
Under Section 6 of the legislation, if a finance company fails to return the deposits on due date or defrauds the public then the promoters, managers and employees would be liable for imprisonment up to 10 years and fine of Rs.1 lakh. The financial establishment shall also be liable for a fine of Rs. 2 lakh which may extend to Rs.1 crore.
Section 5 of the legislation provides that all financial establishments would be required to submit quarterly return of their business to the District Magistrate/Additional District Magistrate. In case of default, the company would be liable to pay fine of Rs.1 lakh.
Section 3 authorises the government to attach the properties of the company and also properties of owners/directors and promoters of the company. Section 4 provides that the officers notified by the government, such as District Magistrate/Additional District Magistrate, will dispose of properties as per orders of the Designated Court. Under Section 8, the government would notify District and Session Judge as the Designated Courts to implement this Act.
Sections 9-12 deal with detailed powers of Designated Courts while Section 16 states that no anticipatory bail would be allowed to promoters, managers and employees of the company found guilty of fraud.
The move follows mushroom growth of financial establishments in Punjab, with many of them making unlawful gains by way of receiving money as deposits from the public, particularly of the middle class and the poorer sections of the society. This is done by such companies by making impracticable or commercially unviable promises or by offering highly attractive rates of interest or rewards, with the intention of not fulfilling the obligation of refunding the deposits on maturity or with the intention of not rendering proper services assured, to the investors at the time of accepting the deposits.
The proposed Bill would go a long way in protecting the rights of innocent depositors, who were often duped by such fraudulent financial institutions on the pretext of supplementing their money manifold.
