The Government of Karnataka on July 22, 2026, issued the Draft Karnataka Protection of Interest of Depositors in Financial Establishment Rules, 2026.
The following has been stated:
• The Rules prescribe detailed procedures for receiving, investigating, and acting upon complaints against financial establishments that default in repayment of deposits or operate fraudulent investment schemes. They designate a Nodal Officer to receive complaints, collect market intelligence, coordinate with District Magistrates and police authorities, investigate fraudulent transactions, and submit reports to the Government in prescribed forms.
• The Rules empower the Nodal Officer to summon persons, require production of documents, inspect records, examine witnesses on oath, investigate accounts, conduct local inspections, obtain expert opinions, and arrange the auction of perishable seized property.
• They also require authorities to verify the financial establishment's activities, regulatory approvals, ownership of movable and immovable properties, sources of income, financial statements, audited accounts, and tax records before recommending action.
• Further, the Rules provide for action against misleading advertisements and fraudulent deposit schemes, prescribe standardized forms for investigations and proceedings, and establish a structured mechanism for attachment, management, realization, and distribution of assets to safeguard the interests of depositors and ensure effective enforcement of the Act.
• The objections or suggestions have been invited from stakeholders by August 8, 2026.
[Notification no. - FD-CAM/52/2025(P-2)]
