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

Kaveri Engineering Ltd, a public company with a deposit-accepting history, has a deposit repayment reserve obligation. The company has deposits maturing during the financial year 2026-27 and the following year. Which statement correctly states the requirement regarding the deposit repayment reserve account?

The company must put at least 20% of deposits maturing in the current financial year and the next one into a separate deposit repayment reserve account with a scheduled bank by 30 April each year. The other options change the percentage, date or period, so they are incorrect.

  1. AIt must deposit by 30 April of each year at least 20% of deposits maturing during that year and the next financial year, in a separate bank accountCorrect
  2. BIt must deposit by 31 March of each year at least 15% of deposits maturing during that year only, in a separate bank account
  3. CIt must deposit by 30 April of each year at least 10% of deposits maturing during that year and the next financial year, in a separate bank account
  4. DIt must deposit by 30 June of each year at least 20% of deposits maturing during the next financial year only, in any investment of its choice

Explanation

The rules require a company to deposit, on or before 30 April each year, at least 20% of the deposits maturing during the financial year and the next financial year in a deposit repayment reserve account kept with a scheduled bank. The other options alter the percentage, date, period or form of holding, so each is wrong.

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