Will the Govt amend the MPID Act to toughen penalties for financial institutions?

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Will the Govt amend the MPID Act to toughen penalties for financial institutions?

Synopsis

In a bold step to protect depositors, Chief Minister Devendra Fadnavis announced plans to amend the Maharashtra Protection of Interest of Depositors Act, enhancing penalties against financial fraud. This move aims to ensure justice for victims of fraudulent financial establishments, reinforcing the government's commitment to safeguarding public interests.

Key Takeaways

  • Amendment to increase penalties
  • Extension of punishment period
  • Support system for property evaluation
  • Addressing limited success of current law
  • Focus on protecting depositors

Mumbai, July 15 (NationPress) In a significant move, Chief Minister Devendra Fadnavis declared in the state assembly that the government intends to revise the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999. This amendment aims to enhance both the penalties and the duration of imprisonment for financial institutions that have defrauded depositors and failed to meet their financial responsibilities.

The Chief Minister elaborated that a framework will be established involving financial specialists and an outsourced system for property assessment. This initiative will support law enforcement and legal proceedings post-registration, aiding in the identification, valuation, and sale of properties involved.

During the question period, the Chief Minister responded to Amol Khatal, who raised concerns regarding the Maitreya group’s fraudulent activities affecting depositors statewide.

Former Finance Minister Sudhir Mungantiwar questioned whether the government plans to extend the punishment period to 20 years from the existing six and increase the fine from Rs 1 lakh to Rs 20 lakh. He passionately advocated for the amendment to safeguard the vulnerable against deception.

Mungantiwar criticized the National Company Law Tribunal (NCLT) for not delivering justice to depositors, citing the DSK Group case where properties worth Rs 16,000 crore were auctioned off for only Rs 827 crore. He urged the government to act swiftly to amend the law to enhance penalties.

The Chief Minister, in his response, noted that the current six-year sentence is bailable due to Supreme Court guidelines, and emphasized the need to enforce stricter penalties for serious offenses. He confirmed that the government will pursue amendments to lengthen the punishment timeframe for financial fraud.

He acknowledged that while the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 exists, its implementation has been limited, particularly in identifying, valuing, and selling properties linked to cases of fraud. To address these issues, he announced plans to create a dedicated system to assist police in expediting these processes.

Point of View

The amendment to the Maharashtra Protection of Interest of Depositors Act signals a crucial step towards enhancing financial accountability. It reflects the government's commitment to protecting vulnerable depositors from financial fraud. This proactive approach aligns with the broader goal of ensuring transparency and justice within the financial sector, fostering trust among citizens.
NationPress
26/07/2025

Frequently Asked Questions

What is the Maharashtra Protection of Interest of Depositors Act?
The Maharashtra Protection of Interest of Depositors Act, 1999, is designed to safeguard the interests of individuals who invest their money in financial establishments, ensuring that these entities fulfill their obligations.
What changes are being proposed in the amendment?
The proposed amendment aims to increase the punishment period from six years to twenty years and raise the fine from Rs 1 lakh to Rs 20 lakh for financial establishments that defraud depositors.
Why is the amendment necessary?
The amendment is necessary to provide stronger deterrents against financial fraud, ensuring justice for victims and enhancing the accountability of financial institutions.
How will the amendment impact depositors?
The amendment will provide depositors with greater protection, potentially leading to more stringent penalties for fraud, thereby increasing the likelihood of recovering their investments.
What support will be provided to law enforcement?
The government plans to establish a system involving financial experts and outsourced machinery to assist in property evaluation and aid law enforcement in prosecuting fraudulent cases.