PROHIBITION OF ACCEPTANCE OF DEPOSITS BY UNINCORPORATED BODIES |
(Governed by S. 45S of the Reserve Bank of India Act, 1934) The position applicable
from 01.04.1997 is as follows:
| 1. Who can borrow |
Circumstances |
From whom?
|
| Individual & Firm |
1 a) If his/its business wholly/partly includes any activities specified
in S. 45I(c) OR
b) If his/its principal business is receiving deposits under any
scheme/arrangement/manner or lending in any manner. |
Only from his relatives or relatives of any partner but not from
partner(s).
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2. In any other case.
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Any person. |
|
Unincorporated association of individuals |
1. If engaged in business specified above.
2. In any other case. |
No one.Any person.
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2. Deposit is defined to include any receipt of money by way of deposit or loan or
in any other form, but excludes amounts :
| Received as |
Received from |
Received by |
|
C
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Share Capital
|
a)
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Any banking co. including Scheduled/ Co-operative Bank
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Subscription to a client’s fund
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b)
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Partners Capital
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b)
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IDBI/SFC/Specified financial institution under IDBI Act/RBI Act
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c)
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Security Money/Advance /Earnest against orders
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c)
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Individual/firm/AOP not being a body corporate registered under any money
lending enactment
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d)
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Credits in the account on Sale of property
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Deposits held as on 1.4.1997 not in accordance with (1)
above, shall be repaid immediately when due or within 3 years from 1.4.1997
whichever is earlier. RBI, on application may extend this period by not more
than 1 year, specifying any conditions.
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On and from 1.4.1997, no person referred to in (1) shall issue
or cause to be issued any advertisement in any form for soliciting deposit.
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Activities contained in S. 45I(c) are Financing (Loans etc.); Investment (Shares,
debentures, etc.); Hire Purchase; Insurance, Chit-fund or Kuries; Collecting and
disbursing moneys in any manner under any scheme/arrangement.
But does not include if principal business is that of agricultural operations,
industrial activities, purchase/sale of goods (not securities) or providing services,
purchase, construction/sale of immovable property.
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For the above purpose, a person shall be deemed to be a relative
of another, if they are :
a) Members of an HUF;
b) Husband and wife;
c) Related in the manner indicated in section 6(c) of the Companies Act, 1956 as
under :
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