Prez nod for depositors’ interest protection Bill

Bhubaneswar: Hopes of thousands of investors, duped by fly-by-night financial companies in the State, to get back their money ran high on Tuesday after President Pranab Mukherjee gave assent to the Odisha Protection of Interests of Depositors (in Financial Establishments) Bill.
The Bill, aimed at protecting interest of the depositors, contains extensive safeguards for protecting small investors from non-banking financial companies (NBFCs) and fraudulent financial entities in Odisha.
The Bill, passed by the State Assembly on December 17, 2011 and sent to the Ministry of Home Affairs (MHA) on April 3, 2012, also proposes imprisonment of up to 10 years for offences including cheating gullible investors.
Legal experts said, the Bill also makes it mandatory for the court to pass an order for attaching and selling properties of the NBFCs within 180 days of completion of probe.
When the Bill becomes an act, there will be a designated court that can attach the properties of the NBFCs and order their sale to compensate the public for their losses.
The Bill also proposes that every finance firm in the State has to submit a report to the district collector and police chief, mentioning the details of its authority, location of the main office and address of all those responsible for the firm’s management within seven days of starting business.
Currently, the State government could only prosecute NBFCs under Prize Chits and Money Circulation (Banning) Act, 1978, and provisions of the Indian Penal Code, which had a maximum punishment of three years, making the offences bailable.
Meanwhile, the State government has announced Rs 300 crore corpus fund to give relief to small investors who have lost their money in the scam and the formation of RK Patra commission to probe into the chit fund scam.
As per government estimates, 650,000 persons were duped of Rs 4,375 crore between January, 2012 and June, 2013, by chit fund companies operating in the state.

The state police and crime branch had taken action against 127 firms, filed 280 cases and arrested more than 300 persons for involvement in the scam.