PART II - ACCEPTANCE OF DEPOSITS

5. Acceptance of deposits by miscellaneous non-banking companies

On and from the 1st July 1977, no miscellaneous non- banking company shall :-

(a) receive any deposit repayable on demand or on notice, or repayable after a period of less than six months and more than thirty six months from the date of receipt of such deposit or renew any deposit received by it, whether before or after the aforesaid date unless such deposit, or renewal, is repayable not earlier than six months and not later than thirty six months from the date of such renewal:

Provided that where a miscellaneous non-banking company has before the 1st July 1977, accepted deposits repayable after a period of more than thirty six months, such deposits shall, unless renewed in accordance with these directions, be repaid in accordance with the terms of such deposits:

Provided further that nothing contained in this clause shall apply to monies raised by the issue of debentures or bonds;

(b) receive or renew :-

(i) any deposit against an unsecured debenture or any deposit from a ¹[shareholder] or any deposit guaranteed by any person who, at the time of giving of such guarantee, was or is a director of the company, if the amount of any such deposit together with the amount of such other deposits of all or any of the kinds of deposits referred to in this sub-clause already received and outstanding in the books of the company as on the date of acceptance or renewal of such deposits, exceeds fifteen per cent of its net owned funds;

(ii) any other deposit, if the amount of such deposit, together with the amount of such other deposits, not being deposits of the kind referred to in subclause (i) of this clause already received and outstanding in the books of the company as on the date of acceptance or renewal of such deposits, exceeds twenty five per cent of its net owned funds;

²[(iii) where any miscellaneous non-banking company holds as at commencement of business on April 12, 1993, deposits in excess of its stipulated limits, it shall reduce such excess deposits by at least one-half before October 12, 1993 and wipe off the balance before April 12, 1994;]

³[(iv) where any miscellaneous non-banking company holds, as at the commencement of business on April 1, 1997, deposits in excess of the limit specified in clause (i) or clause (ii) above, as the case may be, which has been caused only due to the amendment to the definition of `net owned fund' provided in the Explanation to paragraph 5, such company shall reduce the excess deposits by March 31, 1998 by repayment or otherwise.]

⁴[Explanation :-

Net owned fund means -

(a) the aggregate of the paid up equity capital and free reserves as disclosed in the latest balance sheet of the company after deducting therefrom -

(i) accumulated balance of loss;

(ii) deferred revenue expenditure; and

(iii) other intangible assets; and

(b) further reduced by the amounts representing

(1) investments of such company in shares of

(i) its subsidiaries;

(ii) companies in the same group;

(iii) all other non-banking financial companies; and

(2) the book value of debentures, bonds, outstanding loans and advances (including hire purchase and lease finance) made to, and deposits with

(i) subsidiaries of such company; and

(ii) companies in the same group

to the extent such amount exceeds ten per cent of (a) above.]

Note :

1. Amended, vide Notification No.DFC(COC) 71 ED(S)/93 dated May 12, 1993

2. Inserted, vide Notification No.DFC(COC) 67 ED( S)-93 dated April 10, 1993

3. Inserted, vide Notification No.DFC(COC) 104 ED(JRP)/97 dated March 31, 1997

4. Substituted, vide Notification No.DFC(COC) 104-ED(JRP)/97 dated March 3, 1997