Just wanted to know whether non fund based limits given to a company be considered for computation of total borrowings u/s 293 (1) (d) of Companies Act, 1956. What if the Board resolution specifically states that the company can borrow non fund based limits of XX amount
Can I find the solution to above in A. Ramaiya's Guide to Companies Act, 1956?? Kindly quote the reference
29 March 2011
Yes the Fund Base and Non Fund Base Limits availed by the company both are considered for Computation of Total Borrowings u/s 293 of Companies Act, 1956.
27 September 2011
Explanation II to sub section (1) of Section 293 of the Companies Act, 1956 specifically excludes temporary loans from clause (d) of sub section (1) defining the same as those which are repayable on demand or within six months from the date of the loan such as short term, cash credit arrangements, the discounting of bills and the issue of other short term loans of a seasonal character. Working capital loans are always repayable on demand by their nature.
Also, can a non fund based facility be included as "Borrowings" within the said Section??. If Yes, why is it excluded from Secured Loans/Unsecured Loans appearing in Schedule VI to Companies Act, 1956??
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