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CS Executive · Company Law and Practice · Board Composition and Powers of the Board

Himalaya Bank Ltd., a banking company, accepts deposits from the public withdrawable by cheque in the ordinary course of business. How does section 179 treat this for the Board's power to borrow monies?

Such deposit acceptance is not deemed a borrowing of monies. The proviso to section 179(3) says a banking company's acceptance of public deposits in the ordinary course, repayable on demand or otherwise and withdrawable by cheque, draft or order, is outside the borrowing power, so no separate borrowing resolution is needed.

  1. AIt is a borrowing requiring a specific Board resolution each time
  2. BIt is not deemed to be a borrowing of monies within the meaning of the sectionCorrect
  3. CIt is a borrowing that cannot be delegated
  4. DIt is a borrowing requiring approval in general meeting

Explanation

The second proviso to section 179(3) states that acceptance by a banking company in the ordinary course of business of deposits repayable on demand or otherwise and withdrawable by cheque, draft or order is not deemed a borrowing of monies. So no Board resolution under the borrowing power is needed for such deposits.

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