Prohibition of Acceptance of Deposits by Unincorporated Bodies
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Prohibition of Acceptance of Deposits by Unincorporated Bodies
(Governed by S. 45S of the Reserve Bank of India Act, 1934)
1. Who can borrow |
Circumstances |
From whom? |
Individual & Firm |
1. a) If his/its business wholly/partly includes any activities specifiedin S. 45I(c) OR
- If his/its principal business is receiving deposits under any scheme/arrangement/manner or lending in any manner.
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Only from his relatives or relatives of any partner but not from partner(s). |
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2. In any other case. |
Any person. |
Unincorporated association of individuals |
1. If engaged in business specified above. |
No one. |
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2. In any other case. |
Any person. |
The position applicable from 01.04.1997 is as follows:
- 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 way of |
Received from |
Received by |
a) Share Capital |
a) Any banking co. including Scheduled/ Co-operative Bank
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Subscription to a client’s fund |
b) Partners Capital |
b) IDBI/SFC/Specified financial institution under IDBI Act/RBI Act |
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c) Security/Earnest Money/Advance against
orders |
c) Individual/firm/AOP not being a body corporate registered under any money lending enactment |
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d) 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.
- 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.
- 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.
- For the above purpose, a person shall be deemed to be a relative of another, if they are :
- Members of an HUF;
- Husband and wife;
- Related in the manner indicated in section 6(c) of the Companies Act, 1956 as under :
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