The Karnataka Legislative Assembly on December 12, 2024, issued the Karnataka Protection of Interest of Depositors in Financial Establishments (Amendment) Bill, 2024 to further amend the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004.
The following amendments have been stated:
• In section 2, for clause (3), the following shall be substituted, namely:-
(3) "Depositor" means a person who has made deposits with Financial Establishment hereinafter defined but excludes any former or present promoter, owner, partner in any form, Director, manager, member, administrator, accountant or collaborator, employee or any other person with the said establishment or its subsidiaries, whose complicity in the fraudulent activity is proved.
• In section 2, for clause (4a), the following shall be substituted, namely:-
“(4-a) "Market intelligence" means and includes the process of gathering actionable information from all available sources, but not restricted to resources on the internet, regulatory departments, media publications, advertisements whether in print or electronic media or inducing another person to invest in, or become a member or participant of any scheme, social media, surveys and polls, complaints and grievances submitted online manually or orally, or representations from advocates or associations authorized by depositors, about a financial establishment regarding its qualitative and Performance Indicators, financial position and market quantitative Key trends, current and former owners, directors, promoters, partners, agents etc, schemes, regulatory compliances, promotional activities and analysis using suitable tools for the purpose of accurate and confident decision making in determining and regulating fraudulent activities, if any with an objective of protecting the interest of depositors under this Act.”
• In section 5, in sub-section (2), in the proviso, for the words “fifteen days” the words “thirty days” shall be substituted.
• In section 9, in subsection (1),-
o for the words “along with any benefit”, the words “or on demand or otherwise by the depositor or his successor along with or without benefit”, shall be substituted; and
o after the words “promoter, director, partner, manager”, the words “former directors, partners, promoters who have demitted or resigned from establishment provided their liability is limited to the period of office”, shall be inserted. (2) in sub-section (3),
o in clause, in sub-clause (b), after the words “any negligence on the part of any”, the words “such current or former”, shall be inserted.
• In section 11, in Explanation, after the words “member of said establishment”, the words “and former directors, partners, promoters who have demitted or resigned from establishment provided their liability is limited to the period of office”, and shall be inserted.
• After section 21, the following section shall be inserted, namely:-
“21A. Power to make scheme.- (1) The Government may by notification published in the official Gazette make such scheme similar to SEBI (Grant of reward of informant under recovery proceedings) Guidelines, 2023 not inconsistent with the provisions of this Act and rules made thereunder to incentivize whistle blowers to disclose any deposit related illegal activities and or provide original information related to the assets of the defaulters to help the Government to recover monies from fraudsters and to repay the depositors their deposits. (2) Every scheme made under this section shall as soon as may be after it is made, be laid before both the houses of the State Legislature.”
[LA Bill No. 51 of 2024]
