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GMT CASE: 4 sent to police custody for 7 days; 4 others get judicial custody for 15 days

GMT: Maikel at the Lamphel court, Imphal

According to legal observers, this is the first time the Banning of Unregulated Deposit Schemes Act, 2019 has been invoked in Manipur. 

TFM Report

Founder and mastermind of Grow Manipur Team (GMT), Pukhram Maikel Singh (30) along with three associates — his wife Pukhram Babita (28), his sister Pukhram Renuka (28), and his brother-in-law Khandrakpam Bikash Singh (23), have been remanded to police custody for seven days. 

On the other hand, Maikel’s mother Pukhram Rebati (53), his father Pukhram Jiten Singh (61), his sister-in-law Khundrakpam Jenny (22) and Keisham Ulen (24), have been sent to judicial custody for 15 days on Thursday by a court at Lamphel, empowered to prosecute cases under the Banning of Unregulated Deposit Schemes Act, 2019.  

After an investor filed a complaint, that GMT defrauded the complainant of Rs 29,00,000 and also based on an earlier enquiry conducted by Bishnupur police, a case was registered at Moirang PS under 420/406/506/120-B IPC, Prize and Chits Circulation Banning Scheme. 

Consequently, Bishnupur police teams under the supervision of Bishnupur SP Priyadarshini Laishram, arrested Maikel along with seven others from their residences at four places of Imphal West and Bishnupur districts on May 21 and remanded into police custody till May 27, 2021. 

The in-depth investigation into the whole case is led by SDPO Shrey Vats, an IPS officer of 2017 batch. ASP Wangkhomba has also contributed his part and has been instrumental in the process of meticulously conducting the current probe.

During investigation, the scheme was further found to be in contravention of several regulatory norms or provisions and misappropriation. Accordingly the Banning of Unregulated Deposit Schemes Act, 2019 and offences under 403 IPC (Misappropriation of funds) were added in the FIR. 

According to legal observers, this is the first time the Banning of Unregulated Deposit Schemes Act, 2019 has been invoked in Manipur. 

The Act aims to protect investors from fraudulent investment schemes, such as Ponzi schemes. It covers previously existing gaps in legislation that had been exploited by various parties to siphon large amounts of money away from small investors. In essence, all deposit schemes, with or without interest, except those regulated by the government, have been banned by the Act, according to a report in the Indian Express. 

Deposits and Deposit-takers

According to an analysis of the Act by PRS India, deposits are defined as “an amount of money received through an advance, a loan, or in any other form, with a promise to be returned with or without interest”. The Act excludes, among others, payments received in the form of a loan from relatives, and contributions towards capital made by partners in a partnership firm from this definition of deposits.

The Act defines a deposit-taker as the individual, group of individuals, or a company that is soliciting or receiving deposits. The provisions of the Act make it so that in the event of prosecution, it is the deposit-taker who is liable to be prosecuted, and not those who made the deposits, according to the Indian Express report. 

Unregulated deposit schemes, Ponzi schemes

Under the Act, deposit-taking schemes are defined as unregulated if they are undertaken for business purposes, and additionally, are not registered with one of the nine regulatory authorities, whom the Act has made responsible for overseeing such deposit-taking schemes.

A common type of scam involving unregulated deposits is the Ponzi scheme, a type of investment fraud wherein one party promises high returns on an investment with little to no risk. The early investors in a Ponzi scheme are repaid by the scheme acquiring new investors, and so on. Once there are no longer enough people to secure a new round of investments, the scheme collapses and the investors lose their money.

Regulators overseeing deposit-taking schemes

There are nine authorities charged with the oversight and regulation of deposit-taking schemes — the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi), the Ministry of Corporate Affairs (MCA), and state and union territory governments. Each authority oversees different types of deposit-taking schemes, with the RBI overseeing deposits taken by non-banking financial companies (NBFCs), and Sebi overseeing mutual funds. Any deposit-taking scheme must be registered with the relevant authority, based on the category it falls under, and only then is its operation legal, the Indian Express report added. 


Under the provisions of the Act, a competent authority will be appointed, with a rank not below secretary to the state or central government. The Act gives this authority the power to provisionally attach (a protective measure to seize property) the property of the deposit-taker and all the deposits received by them. The Act also allows the competent authority to summon and examine people to obtain evidence, and order records to be produced.

Furthermore, the Act provides for the formation of designated courts in specific areas. The designated court will possess the ability to make the provisional attachment absolute once approached by the competent authority. The court will then direct the competent authority in how the deposits recovered in this manner will be equitably redistributed to the depositors. The entire process is to be completed within 180 days of the application from the competent authority to the court, according to the Indian Express report. 


Three kinds of offences are delineated under this Act — running unregulated deposit-taking schemes (which includes advertising, operating, and accepting money for such schemes), fraudulently defaulting on the deposits made under a regulated deposit-taking scheme, and prompting investors to invest in unregulated deposit schemes by knowingly falsifying facts.

The first kind of offence is punishable by two to seven years of imprisonment, and a fine of Rs 3 lakh to Rs 10 lakh. The second kind of offence is punishable by imprisonment for three to 10 years, and fines ranging from Rs 2 lakhs to double the amount collected from depositors. Repeat offenders may be punished by a five to 10 years stint in prison, and fines ranging from Rs 10 lakh to 5 crore.

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