by on February 22, 2018
The proposed law to crack down on Ponzi schemes will bar real estate developers that offer fixed returns till possession as the government believes that they are “unregulated deposits”. The clampdown on builers and other deposit-seeking entities is part of the Banning of Unregulated Deposit Schemes Bill, which was cleared by the Cabinet on Wednesday and is expected to be introduced in Parliament very soon. The bill requires all deposit-seekers, including entities that are already regulated, to register with the designated authority provided under the proposed law.
Several builders, starved of cash from lenders, offer “assured returns” of 12-14% till possession or even seek investments with the promise of attractive returns. On many occasions, the investors have complained+ that builders have paid the instalment during the initial few months after which the payment has stopped. There are lot of builders who stopped payments after one year and such clients have approached the courts to get their dues. Many times the builder issues 12 post dated cheques to gain confidence , but after that he start making excuses and tries to offer some discounts.
The bill has proposed tough penal provisions, including upto 7 year jail term, for offering unregistered schemes. The schemes being offered by the builders are a grey area with the regulation remaining unclear. Through the new legislation, the government is trying to plug loopholes and protect the interests of depositors.
Posted in: real estate
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