InvestorQ : Why the Investor Education and Protection Fund (IEPF) has been set up?
Dhwani Mehta made post

Why the Investor Education and Protection Fund (IEPF) has been set up?

Answer
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Dia Deshpande answered.
4 weeks ago


Investor Education and Protection Fund (IEPF) has been set-up under Section 205C of the Companies Act, 1956 by way of the Companies (Amendment) Act, 1999. The fund is set up in order to compensate the claims of investors against the brokers who have failed to pay the returns of the investment to the investors. It is a common fund for all the stock exchanges in the country.

Any investor can ask for compensation if a broker of the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) or any other stock exchange has failed to pay the due money for the investments made. The stock exchanges have put specific limits on the amount of compensation that is to be paid to the investors. This limitation has been put according to the discussions and guidance with the IEPF Trust.

According to this limit, the money to be paid as a compensation for a single claim shall not be less than Rs 1 lakh – for the case of major stock exchanges like BSE and NSE – and it should not be fewer Rs 50,000 in case of other stock exchanges.