Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

loan to Huf members

Vikash (G) (393 Points)

27 February 2019

can huf give loan to their members according to new rule

Reply
Follow
Share

2 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 27 February 2019

Yes No restriction among relatives.

The government said individuals borrowing or taking loans or money from relatives or friends for marriage or medical emergency or business needs or any other personal reasons have nothing to fear from the law. Such transactions are not unregulated deposit schemes as defined in section 2(17). Further, any amount received by an individual by way of a loan from his relatives has been entirely exempted under section 2(4)(f).

Small businesses, proprietorship, partnerships, LLPs and SMEs that take unsecured loans from unrelated parties and enterprises are also exempt under Section 2(4)(I) of the law.

This exemption covers “advance payment for hire or supply of goods and covers genuine business needs and trade advances among others so that those who depend on small short-term credit or deposits for various needs do not face any problems”. In the case of charitable institutions, they accept donations and not deposits. Section 2(4) of the Act defines ‘deposit’ and does not include donations.

Also, there is no ban on any individual taking a quick loan to tide over a crisis from relatives as prescribed under Section 2(4)(f)."