Can a Non-banking Company Accept Deposits From Public

8/14/2019 Can a Non-banking Company Accept Deposits From Public

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5 DECEMBER 09 www.afterschool.tk 1

Can a non-banking company acceptdeposits from public ?

by :

DR. T.K. JAIN

AFTERSCHOOL

centre for social entrepreneurship

sivakamu veterinary hospital road

bikaner 334001 rajasthan, indiaFOR PGPSE PARTICIPANTS

mobile : 91+9414430763


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Answer :

Yes but there are many regulations,

we shall discuss about those regulations now


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Deposits ..???

Banking companies can easily take deposits.

But public companies have to followregulations ... sec. 58A,AA,AAA,B of

companies act apply regarding deposits. Thereis Companies (Acceptance of deposits) rules

1975 also which is about rules for depositacceptance. Banks and NBFCs are regulated

by RBI and not by these laws


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What is not a deposit ? (sec. 2b)

Intercorporate deposit

debentures / bond

govt. Grants

loans from promotors

security deposits


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Duration of deposits ?? (rule 3

1.a)

The duration of deposit can be minimum 6months and max. 36 months.


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Maximum rate of interest (rule 3 1

c)

The rate that RBI fixes for NBFCs


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Max. Rate of brokerage

Max. Is 2 %

for deposits upto 1 year : 1%

for deposits 1 to 2 years : 1.5% (rule 31d)


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Minimum net owned funds (31e)

Minimum net owned funds must be 1 crores.


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Ceiling limit on deposit ... rule

3(2)

Deposits against debentures / shares etc. From

shareholders : 10% of paid up capital +reserves

govt. Company can get upto 35% of paid up

capital + reservesfrom other public for other companies : max.

25% of paid up capital + reserves


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Liquid assets rule 3a

Company will have to deposit 15% of accepteddeposits in specified securities

specified securities are :

promissory notes (gilt edge security)

deposits of scheduled banks

UTI / HDFC / govt.bonds schemes etc.


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Advertisement (rule 4)

Proper advertisement in specified format mustbe given in english + vernacular newspapersand a copy of this must be given to Registrar

duly signed by director


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Statement in lieu of advertisement

Rule : 4A : when you dont issue advertisement,file this.


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Register of deposit (rule 7)

Maintain proper register of deposits withdetails like name, amount, address, particulars

of the depositor


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Premature withdrawal ( rule : 8 )

After 6 months anytime provided interest isreduced by 1%


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Penal interest for delay (rule 8A)

A company delaying interest payment /payment of matured depsoits will have to pay

penal interest @ 20% compouding annually.


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Small depositor ?

A person depositing less than or upto 20000 ina company


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Return of deposits ....

As per rule 10 : every company must submitreturn of deposit as on 31 march to registrar of

companies


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How to extend time of deposit ?

If a company wants to extend time, it has tohave : 1. board meeting 2. newspaper

advertisement regarding public notice 3.

permission from government (apply form 1 and65 with all the documents)


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Nomination facility

Depositor may nominate any person in form2B, to company, as per sec. 58A (11)


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Default remedies (sec. 58A 9,10

and 58AAA)

It is a cognizable offence (non bailable,

mentioned in schedule I of Cr. P.C. 1908,arrest without warrant is possible)

a person can apply in form 4 for any such

complaints with copy of deposit receipt, fees ofRs. 50 to company law board / other authorities


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Case : Your company has equity of 10 cr. GeneralReserves of 5 cr. Capital subsity of 5 cr.

Miscellaneous exp. Not written off of 2 crore and

deposit of 1.5 cr. How much deposit can you acceptfrom public (non govt. Company)

10 + 5 + 5 2 = 18

25% of 18 = 4.5 cr. Can be maximum depositfrom public and 10% = 1.8 cr. Can be

maximum deposit from shareholders. The

company already has public deposit of 1.5 cr.So it can take (4.5 1.5) = 3 cr. Maximum

public deposit can be accepted.

Case : Your company has equity of 10 cr General


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Case : Your company has equity of 10 cr. GeneralReserves of 5 cr. Capital subsity of 5 cr.

Miscellaneous exp. Not written off of 2 crore,Convertible debenture : 1 crores and deposit fromshareholders of .5 cr. How much deposit can youaccept from shareholders (non govt. Company)

10 + 5 + 5 = 20 crore

less miss. Exp. 20 2 = 18

10% of this : 1.8 crore

less convertible debenture : 1 cr.

Less deposits from shareholders : .5 cr= .3 cr. Can be taken up from shareholders as

depsoits.General Reserves

Case : Your company has equity of 10 cr Share


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Case : Your company has equity of 10 cr. Sharepremium of 5 cr. Capital subsity of 5 cr.

Miscellaneous exp. Not written off of 2 crore,Convertible debenture : 1 crores and deposit fromshareholders of .5 cr. How much deposit can you

accept from shareholders (govt. Company)

10 + 5 + 5 = 20 crore

less miss. Exp. 20 2 = 18

35% of this : 6.3 crore

less convertible debenture : 1 cr.

Less deposits from shareholders : .5 cr= 4.8 cr. Can be taken up from shareholders as

depsoits.


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Declarations about Deposits ....

Whenever a company goes for IPO / FPO

(follow on public issue 2nd public issue ) , orany other issue, it will have to submit a

declaration that it has not defaulted in deposits


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Can a Non-banking Company Accept Deposits From Public