Centre is considering doing away with the mandatory deposit insurance requirement for deposit-taking firms under the companies act, as per the media reports.
The deposit insurance provision is part of the Companies Act, 2013 but is yet to be made operational. The Corporate Affairs Ministry, which is implementing the Act, has been extending the deadline for implementation of this particular provision, said the PTI report.
Sources said, quoted PTI that, the ministry is looking at scrapping the deposit insurance requirement as suitable insurance product for the purpose is not available in the market.
The view has emerged that it would be difficult to have such an insurance product, they added.
Implementation of the deposit insurance provision has been delayed over the years. A significant part of the Companies Act came into force from April 1, 2014.
This provision of the Act was made as part of larger efforts to safeguard the interest of investors amid instances of ponzi schemes.
In a notification issued on May 11, the ministry again extended the deadline for complying with the deposit insurance norm to March 2018.