In an attempt to safeguard investors from fraudulent money-collection schemes, the government has proposed mandatory insurance cover for public deposits garnered by companies and a penalty of up to 18% annual interest for defaulters, a report in The Times Of India said.
The premium of the deposit insurance c company deposits over would need to be paid by companies and a penalty at an annualised interest rate of 15% would be slapped on those which do not provide a deposit insurance to their depositors, the report added. The proposed measures, which form part of the draft rules for the new Companies Act, also bar the firms from promising huge returns and hefty agent commissions in excess of the prevailing rates prescribed by RBI for such deposits.
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