Calcutta, Dec. 5: The Assembly today cleared a Bill empowering the government to oversee activities of private financial institutions and initiate penal action against them, if necessary.

Finance minister Asim Dasgupta tabled the West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2003, which was passed unanimously.

According to the Bill, if a financial establishment fails to return deposits along with interest, bonus or any other form of benefit after a specified period or if it fails to render services agreed upon, causing “wrongful gain” or “wrongful loss”, it will be a cognisable, non-bailable offence.

The Bill also states that every person, the promoter, partner, director, manager, member, employee or anyone else, responsible for default in repayment of deposits may be jailed for up to six years and fined up to Rs 5 lakh. Apart from imprisonment and cash penalty, property acquired either in the name of the financial establishment or any other person on behalf of such establishment will be seized. Personal assets of the promoter, partner, director, manager or any other official of the establishment will also be attached.

The commissioner of police in the city and the district collectors will function as “competent authority” to hear the depositors’ grievances, initiate moves to verify the complaints and take action against the establishment, if it is found to be a defaulter. The competent authority will have the right to conduct inspection at any of the offices of the financial establishments and check the books of account. The establishments will have to intimate the competent authority about details of their business and submit periodical statements.

After placing the bill before the House, the finance minister said: “It has been observed that a number of private financial establishments have been gaining wrongfully by way of receiving money as deposits from particularly the middle class and poorer sections of the society by making impractical promises like high interest rates, bonus and other rewards.’’

He said the police have booked 148 companies and arrested 223 officials for cheating people in the past few years. Chargesheets had been submitted against another 118 companies. The Trinamul Congress and the Congress supported the Bill today but legislators from both parties blamed the government for being late in introducing it.