Even though it’s common knowledge that one should refrain from investing in corporate deposit schemes that have no/low credit rating, there are many who continue to commit this mistake. They are often lured by high returns and false promises. Another mistake is that these investors don’t read the fine print on the FD form before investing. When these hasty investors face problems listed below, they often forced to regret in leisure. We tell you about the issues related to company FDs and how to handle them.

The problems

Delayed or no payment of principal/interest – It is to be understood that when you invest in an unrated/low rated deposit, the risks are very high. These deposits are by nature unsecured hence they have a higher risk of default. Many companies including Yash Birla group of companies and Micro Technologies have delayed the payment of interest as well as principal on their FDs. Depositors found that they were defrauded.

Non-repayment of principal on premature withdrawal – Corporate FDs are illiquid and withdrawing your money before maturity is almost impossible. You might have to run from one place to another and send loads of letters and sometimes even justify reasons for premature withdrawals.

Not receiving the FD receipt – Many a time, the company fails to grant a deposit receipt and in most cases, it demands the original receipt and proof of identity for repaying the deposit. Some investors who mail the receipt to the company, do not receive any response from the firm as to whether the original was received and they don’t get the maturity amount. They find it difficult to fight the case in court without the original receipt.

No proper redressal system – There are several corporate FDs which have no mention of a dedicated customer service phone line or email for grievance redressal of its FD investors. This means that if you have problems with your FD, you have no proper channel to communicate the same to the company. This could result in delays in receiving FD receipt, interest warrants or your principal.

The solutions

Check the fine print to see what the FD form says. Some companies state on the FD form that interest payment dates are subject to change. Some other companies state on their FD form that repayment would be at the discretion of the firm. Take the case of Unitech’s FD. The application form states: “The Fixed Deposit will be repaid only on maturity and not on demand or notice. The Company, however, at its sole discretion, may permit the depositor to withdraw the Fixed Deposit prior to the maturity date on such terms as to rate of interest, recovery of brokerage etc, as the Company may stipulate and as per provisions of the Companies (Acceptance of Deposits) Rules, 1975 as amended from time to time.” There is little that you can do in such cases.

For all other issues, you would most probably be required to fight it out in court. The first thing to do is to write to the company and see if they will rectify your issue. If they don’t, go to the consumer court.

If the company defaults on the payment of interest and principal, the depositor can approach the Company Law Board (CLB) or even file a civil suit in a court of law to recover the interest and principal. You can also file a complaint online with the Ministry of Corporate Affairs (MCA).

The easiest way is to file a case in the consumer court. The depositor can file a complaint against the company under Sec.12 of the Consumer Protection Act, 1986. You don’t need a lawyer for filing a case in the consumer court.

According to the Department of Consumer Affairs, “The complaint can be made on plain paper and you can file it in person or through an authorised agent, after it has been notarised, through registered post or regular post. It is important that you serve a personal or legal notice to the opposite party before filing the complaint. You will need to file four copies, plus additional copies for each opposite party. And the complaint must be filed within two years from the date of the cause of action having arisen. The court fee for cases involving up to Rs 1 lakh is nil for those holding Antyodaya Anna Yojana cards and Rs 100 for the rest. For cases involving up to Rs 5 lakh the case fee is Rs 200, for case up to Rs 10 lakh the court fee is Rs 400 and for those up to Rs 20 lakh the case fee is Rs 500. The demand draft should be made out to the President, Consumer Disputes Redressal Forum, (name of) district.”

Whichever way you fight, remember that it would take a lot of time, effort and some more money to get your money back. It is best to invest in rated company deposits after researching about the company.

Staff Writer

This article is written by RupeeIQ editorial staff.