The Government of India had constituted an Inter-Ministerial Group (IMG) for identifying gaps in the existing regulatory framework for deposit taking activities and to suggest administrative / legislative measures, including formulation of a new law, to cover all relevant aspects of ‘Deposit Taking’. IMG has finalized its Report and has suggested enactment of a comprehensive Central Law called the “Banning of Unregulated Deposit Schemes and Protection of Depositors’ Interests Bill” (the ‘Banning Bill’). Hon’ble Finance Minister, in his Budget Speech, inter alia had also announced to bring in comprehensive Central legislation in 2016-17 to deal with the menace of illicit deposit taking schemes. In pursuance thereof, Government has placed the IMG Report including the proposed ‘Banning of Unregulated Deposit Schemes and Protection of Depositors’ Interest Bill, 2015’ on the website of Department of Financial Services and the copies of the same have also been circulated by the Department to the concerned Departments / Ministries / State Governments / Union Territories as well as all the Regulators for seeking their comments there upon.

The pyramid marketing companies are not defined in the new legislation. However, the Bill defines ‘Unregulated Deposti Scheme’ and provides for penalty associated with such schemes.

This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Rajya Sabha today.

Unregulated deposit schemes: proposed central law to ban schemes and provide penalties and depositor protection. An Inter Ministerial Group recommended a comprehensive Central statute titled Banning of Unregulated Deposit Schemes and Protection of Depositors' Interests Bill, published with the IMG Report and circulated to government bodies and regulators for comments; the Bill defines and prohibits Unregulated Deposit Schemes and provides penalties, but does not expressly define pyramid marketing companies.