The Hindu : Other States / Pondicherry News : Protecting the interests of depositors

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Thursday, Dec 09, 2004

Other States

Other States - Pondicherry

Protecting the interests of depositors

By Our Staff Reporter

PONDICHERRY, DEC. 8. The Pondicherry Protection of Interests of Depositors in Financial Establishments Bill 2004 passed in the Assembly provides for attachment by the Government of moneyor property of establishments that default in returning deposits to investors.

The statement of objects and reasons also provides for "constitution of a designated court with powers among others to pass orders or issue directions for the equitable distribution among the depositors of the money realised out of the property attached."

It said the Reserve Bank of India had addressed States and Union Territories to protect the interests of depositors by enacting suitable legislation.

The statement said that several financial institutions had come up in the recent past in the Union Territory with the sole object of receiving deposits promising very high rates of interest but without any obligation to refund the deposits to the investors at the time of maturity.

Many of these institutions had defaulted in the return of deposits. Hence, it was proposed "to undertake a legislation which seeks to protect the deposits made by the public in the financial establishments not being a company registered under the Companies Act 1956 or a corporation, or a cooperative society owned or controlled by the State Government or the Central Government or a banking company under the Banking Regulation Act."

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