Topic– Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
4) Discuss the key features of Banning of Unregulated Deposit Schemes Ordinance and examine its impact?(250 words)
Why this question
President Ram Nath Kovind on Thursday promulgated the Banning of Unregulated Deposit Schemes Ordinance and the article discusses the details of the ordinance and its impact.
Key demand of the question
The question expects us to discuss in detail the key features of the ordinance and examine its impact in terms of how it protects small investors from frauds. We need to discuss any issues if there are in the ordinance and the way forward.
Directive word
Examine – When you are asked to examine, you have to probe deeper into the topic, get into details, and find out the causes or implications if any .
Structure of the answer
Introduction – Highlight that President Kovind promulgated the Banning of Unregulated Deposit Schemes Ordinance and state the purpose of yh ordinance.
Body
- Discuss the key provisions of the ordinance
- In a bid to protect gullible investors from ponzi schemes, Prime Minister Narendra Modi-led government last week came out with an ordinance that banned unregulated deposit schemes, which will help to tackle the menace of illicit deposit-taking activities.
- Banning of Unregulated Deposit Schemes Ordinance, 2019 does not ban small and medium enterprises (SMEs) from receiving loans in the course of, or for the purpose of, business, the government has clarified.
- The new law permits deposits from ‘relatives’, banks, financial institutions, property buyers, customers (extending an advance payment), and for other designated purposes. Similarly, a proprietor can borrow from a non-relative as long as it is strictly for business purposes.
- Discuss the impact of these measures
- Although the intent of the government behind bringing the ordinance is applaudable, experts believe this ordinance will have widespread ramification on some sectors and small traders.
- normal transactions like an individual reaching out to friends for a quick loan to tide over a crisis, a cash-strapped businessman borrowing from an acquaintance to meet a personal obligation; or, a charitable institution funding students and the ailing, cannot be done post this ordinance.
Conclusion – Give a fair and balanced view regarding the impact of the ordinance and discuss way forward.
