Section 73(2) (d) of the new Indian Companies Act, 2013 provides a new business opportunity for Indian insurance companies.
It is too early as to guess which Insurance company in India will take the lead in offering such a product.
No, not your full company fixed deposit is insured. The maximum amount of the fixed deposit which can be insured is Rs20,000/-. In case the deposit exceeds Rs20,000/-, the depositor will be entitled only for Rs20,000/- and may have to forego the balance deposit amount.
It may be noted that the Companies Act, 2013 – second of tranche of sections was notified March 26, 2014 and is operational from April 1, 2014.
In the near future, the Corporate Affairs Ministry will be initiated against companies that fail to comply with the new ruling.
According to the specific norms, every company under sub-section (2) of section 73 and every other eligible company inviting deposits shall enter into a contract providing for deposit insurance at least thirty days before the issue of circular or advertisement, as the case may be, as specified in clause (d) of sub-section (2) of section 73 of the Act.
It is also clarified that the insurance premium for the insurance of such deposits has to 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.
As there is no Life Coverage, the Fixed Deposit Insurance will fall under Non-Life insurance and will have to be rolled out by Non-Life Insurance companies only. At present IRDA recognizes 28 Non-Life Insurance Companies.