Manner and extent of deposit insurance

(1)

Every company referred to in sub-section (2) of section 73 and every other eligible company inviting deposits shall enter into a contract for providing deposit insurance at least thirty days before the issue of circular or advertisement or at least thirty days before the date of renewal, as the case may be.

Proviso

Provided that the companies may accept the deposits without deposit insurance contract till the 31st March, 2015. (Effective till 31th March, 2015)

Proviso

Provided that the companies may accept deposits without deposit insurance contract till the 31′ March, 2016 or till the availability of a deposit insurance product, whichever is earlier. (Effective till 28th June, 2015)

Proviso

Provided that the companies may contract till the 31st March, 2017 or product, whichever is earlier.(Effective till 10th May, 2017)

Proviso

Provided that the companies may accept deposits without deposit insurance contract till the 31st March, 2018 or till the availability of deposit insurance product, whichever is earlier.

Explanation

For the purposes of this sub-rule, the amount as specified in the deposit insurance contract shall be deemed to be the amount in respect of both principal

amount and interest due thereon.

(2)

The deposit insurance contract shall specifically provide that in case the company defaults in repayment of principal amount and interest thereon, the depositor shall be entitled to the repayment of principal amount of deposits and the interest thereon by the insurer up to the aggregate monetary ceiling as specified in the contract:

Proviso

Provided that in the case of any deposit and interest not exceeding twenty thousand rupees, the deposit insurance contract shall provide for payment of the full amount of the deposit and interest and in the case of any deposit and the interest thereon in excess of twenty thousand rupees, the deposit insurance contract shall provide for payment of an amount not less than twenty thousand rupees for each depositor.

(3)

The amount of insurance premium paid on the insurance of such deposits shall be borne by the company itself and shall not be recovered from the depositors by deducting the same from the principal amount or interest payable thereon.

(4)

If any default is made by the company in complying with the terms and conditions of the deposit insurance contract which makes the insurance cover ineffective, the company shall either rectify the default immediately or enter into a fresh contract within thirty days and in case of non-compliance, the amount of deposits covered under the deposit insurance contract and interest payable thereon shall be repaid within the next fifteen days and if such a company does not repay the amount of deposits within said fifteen days it shall pay fifteen per cent. interest per annum for the period of delay and shall be treated as having defaulted and shall be liable to be punished in accordance with the provisions of the Act.

Notes, amendments & references (2)

5. Manner and extent of deposit insurance.- Omitted vide Companies (Acceptance of Deposits) Amendment Rules, 2018 dated 5.07.2018. To view the notification, Click Here

Substituted vide Companies (Acceptance of Deposits) Amendment Rules, 2017 dated 11.05.2017. To view the notification, Click Here