17 Feb 2020Posted By: Mudit Handa

Banning of Unregulated Deposit Schemes Rules 2020 introduced

The government has taken numerous corrective measures to curb the malpractices and fraudulent activities in our country. With a view to putting an end to all the illicit depository schemes and other such Ponzi schemes, the Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act 2019) was passed by the Government of India on 31st July 2019

Know about BUDS Act 2019.

The BUDS Ordinance 2019 was made effective from 21st February 2019 itself. However, the BUDS Act was finally promulgated on 31st July 2019

Now, the government has introduced the Banning of Unregulated Deposit Schemes Rules, 2020 in this regard.

Refer to the 


1. What are the BUDS Rules 2020?

The Ministry of Finance has notified the Banning of Unregulated Deposit Schemes Rules (BUDS) 2020. It discusses a detailed approach to curb unlawful deposit exercises.

Besides, it also has different provisions associated with:- 

  • Data and points of interest to be considered, 

  • Modes of provisional attachment and 

  • Treatment of the temporarily attached property.

2. What is the key highlight of BUDS Rules?

The main highlight of BUDS rules is that a new term has been coined “competent authority”. 

3. Who is the competent authority here?

Here, the competent authority refers to the power designated by the Central Government u/s 7 of the BUDS Act 2019. Such an authority has indistinguishable powers from vested in a civil court as per the Civil Procedure Code (CPC). These powers are with respect to the examination or inquiry as regards the offenses under the BUDS Act. 

4. What is the role of the competent authority?

The role of the competent authority is to consider all complaints against the promotion or exercising of the Ponzi schemes. This shall be regardless of whether or not the complainant is himself a depositor (i.e. victim) in the Ponzi scheme. 

5. How shall the Ponzi schemes be traced?

The competent authority shall soon introduce a government portal. Here, the general public can refer to the all complete data associated with deposit acceptors.

This will help in tracing of any fraud deposit acceptor.


If you want any sort of guidance regarding BUDS 2019 or the process of company formation, you can feel free to contact our business advisor at 8881-069-069.

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