The Corporate Affairs Ministry has proposed mandatory insurance cover for public deposits garnered by companies and hefty penalty of up to 18 per cent annual interest for defaulters. This has been proposed to safeguard investors from fraudulent money-collection schemes.

The premium of the deposit insurance cover will need to be paid by companies themselves. The proposed measures, which form part of the draft rules for the new Companies Act, also bar the companies from promising huge returns and hefty agent commissions in excess of the prevailing rates prescribed by RBI for such deposits.