Welcome to our comprehensive FAQ guide on the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019—an important legislation enacted by the Government of India to curb financial frauds involving unregulated deposit schemes. This page is designed to help individuals, businesses, and legal professionals understand the key aspects of the BUDS Registry, the BUDS portal, and the entity registration process mandated under this Act.
Whether you are a deposit taker, a regulatory authority, or simply want to understand who qualifies as a deposit taker and what falls under an unregulated deposit scheme, this page covers all the essential questions in an easy-to-read format.
Some key topics covered in the FAQs include:
- The objective and scope of the BUDS Act
- What defines a regulated or unregulated deposit
- Who needs to register on the BUDS portal
- The role of Competent Authorities and Designated Courts
- Required information for onboarding and profile updates
These FAQs are curated to provide clarity and help stakeholders ensure compliance with the BUDS Act’s provisions while protecting depositors and enhancing financial transparency.
🧾 About BUDS Registry and BUDS Portal
1. What is the aim of the BUDS Act, 2019?
The Banning of Unregulated Deposit Schemes Act, 2019 seeks to protect public interest by prohibiting individuals and entities from promoting or operating deposit schemes that are not overseen by authorized regulatory bodies.
2. Can you explain what the BUDS Registry is?
The BUDS Registry is a centralized digital platform created by the government to track and record entities that accept deposits. It acts as a surveillance tool to help authorities identify and prevent illicit deposit-taking activities.
3. Who needs to register on the BUDS portal?
All individuals or organizations engaged in accepting deposits—regardless of whether they’re regulated or unregulated—are required to provide their details through the BUDS portal.
4. Which bodies approve regulated deposit schemes under this law?
Regulated deposit schemes must be authorized by respective regulatory authorities such as SEBI, RBI, IRDAI, PFRDA, and others listed in the law’s official schedule.
5. How is a “deposit” defined in the BUDS Act?
A “deposit” refers to any money received with a promise to repay—whether with or without returns—by any individual or entity, not falling under the exclusions mentioned in the Act.
6. What types of funds are not considered deposits under this Act?
The Act exempts several categories from being treated as deposits, such as bank loans, equity investments, trade advances, and contributions among close relatives or partners, among others.
7. Who qualifies as a deposit taker?
Any person, firm, or institution that invites or accepts deposits from the public falls within the scope of a deposit taker—unless explicitly excluded by the Act (e.g., scheduled banks, government bodies).
8. Who is disqualified from being a deposit taker?
Organizations such as commercial banks, cooperative banks, and certain government-established entities are not considered deposit takers under the Act and are exempt from its provisions.
9. What constitutes an unregulated deposit scheme?
Any deposit scheme that operates outside the purview of recognized regulatory oversight and is run as a business is considered unregulated under the law.
10. What is the role of a Competent Authority in this framework?
A Competent Authority is a senior official appointed by the government with powers to investigate, attach properties, summon parties, and assist in prosecution related to illicit deposit activities.
11. Which court handles disputes or cases under the BUDS Act?
A special court, known as the Designated Court, is set up under the Act to adjudicate cases. It is usually led by a district or sessions judge nominated by the government in consultation with the High Court.
12. Who manages the official database of deposit takers?
The central government appoints a designated authority responsible for maintaining the BUDS Registry and ensuring accurate, up-to-date information is captured from all relevant parties.
🏢 About Entity Registration
1. What details must deposit takers provide during registration?
They need to submit their business name, address, ownership information, nature of the deposit scheme, financial credentials, and other necessary documentation as outlined by the regulatory framework.
2. What information must regulators and judicial bodies submit?
Regulatory agencies, competent authorities, and designated courts must provide relevant updates on cases, actions taken against deposit takers, or any significant decisions made under the Act.
3. What must deposit takers update in their profile?
Deposit takers must report any changes in their registered details, including updates to scheme status, business structure, regulatory approvals, or cessation of operations.
📌 Disclaimer: This FAQ is for informational purposes only and is based on publicly available resources. For complete details and official updates, please refer to the BUDS Registry portal at https://www.niyamitnivesh.in.