Section 4 of BUDS Act : Section 4: Fraudulent Default In Regulated Deposit Schemes

Explanation using Example

Imagine Mr. Sharma runs a small finance company that accepts fixed deposits from the public. His company is registered and operates under the regulations set by the Reserve Bank of India, which means he is involved in a Regulated Deposit Scheme. According to Section 4 of The Banning of Unregulated Deposit Schemes Act, 2019, Mr. Sharma is legally obligated to return the deposits to the customers upon maturity without any fraudulent defaults. If Mr. Sharma's company promises a certain interest rate on these deposits, he must honor this commitment and pay the interest as promised when the deposit matures. Failing to do so would mean violating the law, which could lead to legal repercussions for Mr. Sharma and his company.