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CA Intermediate · Corporate and Other Laws · Acceptance of Deposits by Companies

Deposits of ₹5,00,00,000 accepted by Narmada Foods Ltd, a public company, will mature during the financial year 2027-28. Under the Deposit Rules, what must the company do about the deposit repayment reserve account?

Narmada Foods must place ₹1 crore, which is 20% of the ₹5 crore maturing in 2027-28, in a deposit repayment reserve account with a scheduled bank on or before 30 April 2027. The amount can be used only to repay those deposits.

  1. ADeposit ₹1,00,00,000 in a scheduled bank by 30 April 2027Correct
  2. BDeposit ₹1,00,00,000 in a scheduled bank by 31 March 2028
  3. CDeposit ₹50,00,000 in a scheduled bank by 30 April 2027
  4. DDeposit ₹5,00,00,000 in a scheduled bank by 30 April 2027

Explanation

The company must deposit, on or before 30 April each year, at least 20% of the deposits maturing during the following financial year in a separate deposit repayment reserve account with a scheduled bank. 20% of ₹5 crore is ₹1 crore, and the date is 30 April 2027. A 10% amount (₹50 lakh) or the full amount is wrong, and 31 March 2028 is the wrong date.

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