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BUDS (Banning of Unregulated Deposit) Rules, 2020.

1. Short title and commencement:

(1) These rules may be called the Banning of Unregulated Deposit Schemes Rules, 2020.

(2) These rules shall come into force on the date of their publication in the Official Gazette.

2. Definitions:

(1) In these rules, unless the context otherwise requires:-

a) ”Act” means the Banning of Unregulated Deposit Schemes Act, 2019 (21 of 2019);

b) ”application” means an application filed by the Competent Authority under section 14 of the Act;

c) ”authority” means the authority designated under section 9 of the Act;

d) ”Competent Authority” means an authority appointed by the appropriate Government under section 7 of the Act, and

e) ”Designated Court” means a Designated Court constituted by the appropriate Government under section 8 of the Act.

(2) The words and expressions used herein and not defined but defined in the Act shall have the meanings assigned to them in the Act.

3. Information and particulars to be considered:

The information and particulars which the Competent Authority shall consider for provisionally attaching the property of the deposit taker shall include, namely:–

(a) any complaint against the promotion or operation of an Unregulated Deposit Scheme, whether the complainant is a depositor in the said Unregulated Deposit Scheme or not;

(b) any information received from the Central Government, or any State Governments or Union territory Administrations, or any law enforcement authority or agency or body under the charge of such Governments or Administrations, regarding the promotion or operation of an Unregulated Deposit Scheme;

(c) information of any advertisement, whether in print or electronic media or both, inducing another person to invest in, or become a member or participant of any Unregulated Deposit Scheme; and

(d) any other information that the Competent Authority has, that a deposit taker is soliciting or accepting deposits in contravention of the provisions of the Act.

4. Manner of provisional attachment and administration of provisionally attached property:

(1) A copy of the order of provisional attachment shall be served on the owner of the property or any person who claims to be in possession of the property or any other person who has an interest in the said property.

(2) The order of provisional attachment shall be published in a leading newspaper (both in vernacular and in English) having wide circulation in the area or jurisdiction in which the deposit taker is located.

(3) Where the Competent Authority is not able to serve the order of provisional attachment to a person specified in sub-rule (1), then such person shall be deemed to be served the order by the publication of the order in the manner provided under sub-rule (2).

(4) The Competent Authority shall take possession of the immovable property by affixing the order of provisional attachment at a conspicuous place of such immovable property.

(5) Where the property to be attached is a moveable property, the Competent Authority shall take actual physical possession of such property and retain it in his custody or the custody of any other officer appointed to assist him.

(6) The Competent Authority shall maintain a record of the property provisionally attached which shall include details of any expenditure incurred or any costs of management of the property and of any income received from the property.

(7) The Competent Authority shall assess the assets and the liabilities of the deposit taker and prepare a complete record of depositors from whom the deposit taker has collected deposits pursuant to any Unregulated Deposit Scheme.

(8) The Competent Authority may appoint a valuer for the purposes of assessing the assets and liabilities of the deposit taker under sub-rule (7).

(9) Where any property of which possession has been taken is of a perishable nature, the Competent Authority may sell the same keeping in mind the best interest of the depositors.

(10) The details and proceeds of the sale under sub-rule (9) shall be entered separately by the Competent Authority and maintained in the record as specified in sub-rule (6).

5. Impounding and retention of records:

(1) The person from whose custody records are impounded under subsection (8) of section 7 of the Act may make copies thereof, or take extracts therefrom, in the presence of an officer authorized by the Competent Authority, at such place and time as the Competent Authority may appoint in this behalf.

(2) The officer appointed under sub-section (2) of section 7 shall retain such records in his custody without taking approval from the Competent Authority for a period up to three months, and if the records are necessary to be retained beyond the said period, approval of the Competent Authority shall be required.

(3) If the person from whose custody records are impounded objects for any reason to the records being impounded, he may make an application to the Competent Authority stating therein the reasons for such objection and requesting for the return of the records, and the Competent Authority may, after giving the applicant an opportunity of being heard, pass such orders as he thinks fit.

(4) The officer shall ensure the safe custody of the records impounded and retained in his custody.

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BUDS (Banning of Unregulated Deposit) Rules, 2020.

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