The Cabinet on Wednesday approved a Bill that increases punishment for illegal deposit schemes, aiming to protect the poor from fraud and retrieve their money.

The Banning of Unregulated Deposit Schemes will replace the Banning of Unregulated Deposit Schemes Ordinance, 2019.

Information and Broadcasting Minister Prakash Javadekar said people are suffering due to chit fund scams.

"The bill will help tackle the menace of illicit deposit taking activities in the country, which at present are exploiting regulatory gaps and lack of strict administrative measures to dupe poor and gullible people of their hard earned money," an official release said.

The proposed legislation will have adequate provisions for punishment and repayment of deposits in cases where such schemes nonetheless manage to raise deposits illegally, it added.