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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Debt and Procedural Aspects

Meridian Textiles Ltd, a public company, has deposits of ₹50 crore maturing during the next financial year and is accepting deposits from members under section 73. The Act requires it to deposit, on or before 30 April each year, a sum in a separate account with a scheduled bank. What is the minimum amount for Meridian?

Meridian must keep at least twenty per cent of the deposits maturing in the following financial year in a deposit repayment reserve account with a scheduled bank by 30 April. Twenty per cent of ₹50 crore is ₹10 crore.

  1. A₹5 crore
  2. B₹10 croreCorrect
  3. C₹15 crore
  4. D₹25 crore

Explanation

The deposit repayment reserve account must hold not less than 20% of deposits maturing in the following financial year. 20% of ₹50 crore = ₹10 crore. Choosing ₹5 crore uses 10%, and ₹25 crore uses 50% of the amount; neither is in the Act.

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