repayment of fd

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JOSEPH DAVID

GM FINANCE

286 Points Joined August 2008

Mr Vaibhavshukla

It is not an NBFC Company-can they repay the deposit

thanks

joseph david

Replies (2)

CS Ankur Srivastava

Company Secretary & Compliance Officer

17858 Points Joined November 2008

Dear Joseph,

As per rule 3 of Companies (Acceptance of Deposit Rules) 1975 no Company shall accept or renew any deposit which is repayable on demand or on notice or after a period of less than 6 months or more than 36 months from the date of acceptance or renewal of such deposit.

And the Company has accepted the deposit for 12 months and there is restriction for acceptance for less than 6 month (in some case 3 month) and more than 36 months.

Where the Company makes repayment of a deopsit after the expiry of 6 months but before the expiry of the period for which such deposit was accepted by the company, the rate of interest payable by the company on such deposit shall be reduced by 1% from the rate at which the company would have to repay it .

Thus in this case the Company can not repay this reposit as it is not repayable on demand.

Vaibhav Shukla

Company Secretary

142 Points Joined June 2009

Dear Mr Joseph,

In this case, the company should not repay the deposit since a deposit repayable after a period of less than six months should not be accepted. For your refernce the following rule shall be helpful.

Acceptance of deposits by companies.-

(a) no company shall accept or renew any deposit which is repayable on or on notice or after a period of less than six months or more than thirty six months from the date of acceptance or renewal of such deposit: demand

Provided that a company may for the purpose of meeting any of its short term requirements for funds, accept or renew, such deposits as are referred to in Clause (i) of sub-rule (2) for repayment earlier than six months from the date of deposit or renewal, as the case may be, subject to the condition that such deposit-

(i) shall not exceed ten per cent of the aggregate of the paid-up share capital and free reserves of the company, and

(ii) are repayable not earlier than three months from the date of such deposit or renewal thereof, as the case may be

Provided further that where a company has before the 1st day of April, 1978, accepted any deposit repayable after it period of more than thirty-six months, such deposits shall, unless renewed after the said date, be repaid in accordance with the terms of such deposits

(c) no company shall invite or accept or renew any deposits in any form, on a rate of interest exceeding * 12.5 per cent per annum at rests which shall not be shorter than monthly rests ;