Sections 9, 10 and 11 of the Banning of Unregulated Deposit Schemes Act, 2019
Chapter IV of the Banning of Unregulated Deposit Schemes Act, 2019 deals with information on deposit takers. Sections 9 to 11 establish the central database framework, require specified deposit takers to intimate their business, and create information-sharing duties among competent authorities, regulators, tax authorities, investigation agencies and certain banks.
- Section 9: enables the Central Government to designate an authority to create, maintain and operate an online database of deposit takers.
- Section 10: requires deposit takers covered by the provision to intimate the Section 9 authority and permits the Competent Authority to demand information where an Unregulated Deposit Scheme is suspected.
- Section 11: requires specified public authorities, investigation bodies and banking institutions to share relevant information.
Key definitions relevant to Sections 9 to 11
The expressions used in Chapter IV derive their meaning principally from Section 2 of the Act. The following definitions are especially relevant when reading Sections 9, 10 and 11.
For the full and controlling definitions, read Section 2 of the Act together with the First Schedule and applicable rules.
Section 9 - Central database
9. Central database. - (1) The Central Government may designate an authority, whether existing or to be constituted, which shall create, maintain and operate an online database for information on deposit takers operating in India.
(2) The authority designated under sub-section (1) may require any Regulator or the Competent Authority to share such information on deposit takers, as may be prescribed.
What Section 9 means
Section 9 provides the statutory foundation for a central information system concerning deposit takers. The database is intended to consolidate information that may be supplied by regulators and Competent Authorities in the prescribed manner. The provision should be read with the Banning of Unregulated Deposit Schemes Rules, 2020, which were framed under Section 37 of the Act.
Section 10 - Information of business by deposit taker
10. Information of business by deposit taker. - (1) Every deposit taker which commences or carries on its business as such on or after the commencement of this Act shall intimate the authority referred to in sub-section (1) of section 9 about its business in such form and manner and within such time, as may be prescribed.
(2) The Competent Authority may, if it has reason to believe that the deposits are being solicited or accepted pursuant to an Unregulated Deposit Scheme, direct any deposit taker to furnish such statements, information or particulars, as it considers necessary, relating to or connected with the deposits received by such deposit taker.
Explanation. - For the removal of doubts, it is hereby clarified that -
(a) the requirement of intimation under sub-section (1) is applicable to deposit takers accepting or soliciting deposits as defined in clause (4) of section 2; and
(b) the requirement of intimation under sub-section (1) applies to a company, if the company accepts the deposits under Chapter V of the Companies Act, 2013 (18 of 2013).
Compliance effect of Section 10
Sub-section (1) creates a reporting or intimation obligation to the authority designated under Section 9. Sub-section (2) is an investigative information-gathering power: where the Competent Authority has reason to believe that deposits are being solicited or accepted under an Unregulated Deposit Scheme, it may direct a deposit taker to furnish statements, information or particulars connected with those deposits.
Section 11 - Information to be shared
11. Information to be shared. - (1) The Competent Authority shall share all information received under section 29 with the Central Bureau of Investigation and with the authority which may be designated by the Central Government under section 9.
(2) The appropriate Government, any Regulator, income-tax authorities or any other investigation agency, having any information or documents in respect of the offence investigated under this Act by the police or the Central Bureau of Investigation, shall share all such information or documents with the police or the Central Bureau of Investigation.
(3) Where the principal officer of any banking company, a corresponding new bank, the State Bank of India, a subsidiary bank, a regional rural bank, a co-operative bank or a multi-State co-operative bank has reason to believe that any client is a deposit taker and is acting in contravention to the provisions of this Act, he shall forthwith inform the same to the Competent Authority.
How the information-sharing system works
Section 11 creates mandatory channels for exchange of information. The Competent Authority must pass information received under Section 29 to the Central Bureau of Investigation and the Section 9 authority. Other specified governmental and investigative bodies must share relevant material with the police or CBI where an offence under the Act is being investigated. Certain banking institutions also have an express duty to inform the Competent Authority when the statutory threshold in Section 11(3) is met.
Banning of Unregulated Deposit Schemes Rules, 2020
The Central Government notified the Banning of Unregulated Deposit Schemes Rules, 2020 on 12 February 2020 under Section 37 of the Act. The Rules supplement the Act, including matters concerning the information to be shared with the central database under Section 9(2) and the form, manner and time for intimation under Section 10(1).
Because compliance requirements may depend on the rules, notifications and the identity of the relevant Competent Authority, the Act should not be read in isolation for operational compliance.
Official legal resources
This page reproduces the statutory provisions for general legal information. In case of any difference, amendment, notification or jurisdiction-specific rule, the official Gazette and India Code text should be consulted.