To rein in fraudulent non-banking finance companies (NBFCs) and unincorporated bodies that have swindled crores of rupees from the poor,the Orissa Assembly Saturday passed a Bill to keep a watch on such firms.
Finance Minister Prafulla Ghadai,who tabled the Orissa Protection of Interests of Depositors (in financial establishment) Bill,2011,said the law would not only curb illegal activities of unscrupulous NBFCs,but also protect the interest of depositors.
The depositors would get their return with benefit/interest accrued,which is not available under the current provisions of the Reserve Bank of India Act, he added.
Until now,the state government used to prosecute offender NBFCs under the Prize Chits and Money Circulation (Banning) Act,1978,and provisions of the Indian Penal Code which had a maximum punishment of three years. A maximum jail term of three years meant the offences were bailable. The new Act would enable the state to take such NBFCs to task as the imprisonment period is 10 years, said Additional Director General of Police (CID),Abhay.
Under the new Act,there will be a designated court that can attach the properties of the NBFCs and order sale of the same to compensate the public for their losses. After investigation in the case is over,the court has to pass an order within 180 days for attaching and selling the property of the NBFC.
Under the Act,every financial establishment which commences or carries out its business in the state has to submit a report to the district collector and SP,mentioning the details about its authority,the location,the main office and address of every person responsible for the firms management within seven days of starting work.
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