The Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act) was passed by the Indian Parliament to safeguard investors from fraudulent and deceptive financial schemes that promise high returns without any regulation or approval.
In recent years, several people across India have lost their hard-earned savings to unregulated schemes run by unauthorized entities. The BUDS Act seeks to address this serious issue by clearly defining illegal deposit-taking activities and empowering authorities to take strong legal action against such promoters.
Why Was the BUDS Act Introduced?
The Act was brought in to:
- Prevent ordinary citizens from falling prey to “too good to be true” money schemes
- Ban any scheme that is not registered with a regulated authority (like RBI, SEBI, IRDAI, etc.)
- Ensure people offering deposits are licensed and accountable
Key Highlights of the Act:
- Ban on Unregulated Schemes (Section 3):
No person or company can promote or accept money under an unregulated deposit scheme. - Strict Penalties (Sections 21–24):
Imprisonment of up to 10 years and fines up to ₹50 crore for violators. - Whistleblower Protection (Section 10):
Allows individuals to report suspicious schemes and help authorities intervene early. - Attachment of Property (Section 7):
Authorities can freeze and recover assets from fraudsters to repay victims.
How Can You Stay Safe?
Before investing your money in any scheme, always:
- Check whether the company or individual is registered as a deposit taker on the official government portal: niyamitnivesh.in
- Avoid schemes that guarantee unusually high returns in a short time
- Report suspicious activity to your local police or financial regulator
Conclusion
The BUDS Act is a powerful tool that protects citizens from financial fraud and unauthorized deposit takers. As an informed investor, you play a vital role by staying cautious, verifying details, and spreading awareness.
Stay tuned to this blog for regular updates, simplified breakdowns of the law, and monthly insights from the official registry.
Source:
Official BUDS Portal: niyamitnivesh.in
Disclaimer: This blog is for general informational purposes only. Please refer to the official government website for complete details.