Jaypee Infra deposit holders can file claims as ‘creditors’
to the collection notification option. Under the collect notification, you will get a request from Uber to collect Re1, with customer reference number and amount. Once approved, you will get a message showing that the amount was approved successfully. The money will be debited from your Upi-linked account instantly. You will also get a message on your Uber app stating the app is ready for accepting UPI payments. The next time you book an Uber cab, you can start using your UPI payments option . To make a payment for the trip, you will have to use your UPI PIN.
HOW TO USE UPI
To start using UPI, you need to have a bank account, a registered mobile number that is linked to your bank account, and an Android or IOS smartphone to download a Upi-enabled app and your bank needs to be a UPI member. You can use UPI on your feature phones too. To transact through UPI, you need to download a Upi-enabled app and then choose the UPI option. If you have apps that are Upi-enabled—such as Truecaller—and are already on your phone, you can create a UPI virtual address through that app too. The process of creating a virtual address will vary from app to app. In all cases, you will need to verify you mobile number on the app followed by your bank account details to create a virtual address. Usually a Upi-enabled app will populate the details such as your bank account number and Indian Financial System Code (IFSC). If you have multiple bank accounts, you can select the one you want to link with UPI. You also have to generate a PIN which will be required to authenticate the transaction through UPI.
Everybody is talking about how the insolvency proceeding against Jaypee Infratech has left its buyers of under-construction houses in the lurch. But these are not the only group of retail investors affected by these proceedings. There are also those who had invested in fixed deposits of the company. According to the Insolvency and Bankruptcy Code, 2016, these investors fall in the category of unsecured creditors.
Such investors have lost money in company fixed deposits earlier too. Housing and construction companies such as Unitech Ltd, Ansal Properties and Infrastructure Ltd, and DSK Group have also defaulted on repayment of principal or interest. This is not limited to a particular sector. Companies like Birla Shloka Edutech Ltd, Helios and Matheson Information Technology, and Elder Pharmaceuticals have also defaulted. While companies offer better interest than banks, deposits with them also come with higher risks. Let us read about them.
CORPORATE FIXED DEPOSITS
Like bank fixed deposits, these too offer a predetermined interest rate. However, their interest rates are usually 2-3% higher than those of banks. Despite paying a higher interest rate, for companies it is still cheaper compared to raising money from financial institutions.
Corporate fixed deposits are far less secure than bank deposits and carry greater risk of default—which means, you could lose your principal and interest. Jaypee Infratech had also raised money from such fixed deposits. As part of the insolvency proceedings, these depositors too are required to submit their claims to the Insolvency Resolution Professional (IRP). Fixed deposit holders are categorized as financial creditors of the company and are required to file their claim in Form C issued by the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. However, these depositors are classified as unsecured financial creditors. Thus, if the company is liquidated, they will get their money only after satisfying the claims of creditors whose precedence is higher than theirs. According to the insolvency code, this means, after paying: the costs of the insolvency resolution process and liquidation cost, debts of the workmen, secured creditors, wages and unpaid dues owed to the employees other than the workmen. And if no money is left after satisfying all these creditors, the unsecured creditors may not get paid. The insolvency code does not lay down how to deal with creditors whose claims could not be fulfilled by the liquidation proceeds.
SHOULD YOU INVEST?
Compared to corporate deposits, fixed deposits in banks are insured up to Rs1 lakh (aggregate deposits in one bank) by the Deposit Insurance and Credit Guarantee Corporation (DICGC). This means, in case of default by schedule commercial banks or cooperative banks, DICGC will pay you up to Rs1 lakh if banks defaults on your fixed deposit.
Corporate deposits have no such guarantee. Keep that in mind before investing in them. You should not be swayed by the high returns promised by these deposits. You should have an understanding of the company you are investing in, go for only those with credit rating higher than AA+.