Karnataka Assembly clears Depositors’ Bill

The Assembly on Tuesday passed the Karnataka Protection of Interest of Depositors in Financial Establishments Bill, 2020, amidst demands from Opposition parties to introduce provisions for a permanent authority to monitor such establishments.

Congress MLA Rizwan Arshad noted that the amendments introduced by the government lacked provisions to prevent frauds, but only dealt with issues after a fraud was committed.

“A permanent competent authority should be established where financial firms are certified,” he said.

‘Act against officials’

JD(S) MLA AT Ramaswamy demanded provisions in the Bill to Act against officials who turn a blind eye to fraudulent companies.

“There is a nexus (between officials and fraudsters). If we cannot keep an eye on officials, such law will be of little use,” he said. Another Congress MLA Ramesh Kumar urged the government to ‘withdraw, revise and update the Bill’ with more stringent provisions.

Responding to the demands, DyCM Govind Karjol said that many of the concerns raised by legislators were addressed in the Banning of Unregulated Deposits Act, 2019. There are provisions in the Act for the Reserve Bank of India to regulate such establishments, he added.

The Bill also increased penal provisions for those convicted for fraud. Imprisonment term was increased from three to seven years and fines which may extend up to Rs 10 lakh. Convicted financial establishments are also liable for a fine equivalent to Rs 5 lakh, or if deposits are “quantifiable in terms of money, twice the amount of aggregate funds collected” from members.

Fine under Epidemics Act

An amendment to the Karnataka Epidemic Diseases Bill, 2020, was also cleared by the Assembly, which empowered the government to levy fines on those who violate guidelines during the epidemic.

Earlier, to levy fines, the government had to file a criminal complaint against the errant party and penalise the person after permission from the jurisdictional court.

The amendment introduced provisions for local authorities to levy fines while enforcing guidelines during an epidemic.