MUMBAI: In a move aimed at tightening the legal framework against financial frauds and speeding up recovery for duped investors, the Maharashtra legislature on Wednesday passed amendments to the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act), bringing virtual digital assets (VDAs) such as cryptocurrencies and other blockchain-based digital instruments within the ambit of the law.The Bill, introduced by Chief Minister Devendra Fadnavis, also seeks to curb delays in MPID cases by capping adjournments before designated courts and making it mandatory for financial establishments to deposit 50% of their total liability before their appeals against recovery orders can be entertained.The government said the amendments were necessitated by the growing use of cryptocurrencies, digital coins and other blockchain-based assets in financial frauds, unauthorised deposit schemes and investor scams. Since such assets were not covered under the existing definition of “deposit”, the law was unable to effectively deal with several emerging frauds involving virtual digital assets.Under the amendment, the definition of “deposit” in the Act has been expanded to include any Virtual Digital Asset, with the term carrying the same meaning as assigned under Section 2(111) of the Income-tax Act, 2025.To ensure quicker disposal of cases, the Bill provides that designated courts hearing MPID matters can grant no more than two adjournments. A third adjournment will be allowed only in exceptional circumstances after the court records written reasons, a provision modelled on the Bharatiya Nagarik Suraksha Sanhita, 2023.The amendments also seek to discourage financial establishments from filing appeals merely to delay repayment to investors. Under the revised law, no appeal against an order of a designated court will be entertained unless the financial establishment deposits 50% of its aggregate liability with the Competent Authority.According to the Statement of Objects and Reasons accompanying the Bill, the changes are intended to strengthen protection for depositors, plug legal gaps exploited in digital asset-based frauds and ensure faster recovery of investors’ money by reducing procedural delays.What the amendments mean for depositors
- Cryptocurrency and other virtual digital asset-based investment frauds can now be pursued under the MPID Act.
- Recovery proceedings are expected to move faster with strict limits on adjournments.
- Financial establishments will find it harder to delay repayments through prolonged appeals, as they must first deposit half of their total liability before challenging recovery orders.
- The government said the amendments are aimed at modernising the nearly three-decade-old law to address evolving forms of financial fraud while strengthening safeguards for depositors across Maharashtra.
