Prohibition of Acceptance of Deposits by Unincorporated Bodies

(Reserve Bank of India Act, 1934)

1. Deposits not to be accepted:

By Individual/Firm/Unincorporated association of individuals if:

Business wholly or partly includes any of the activities specified in section 45I(c) or
Principal business is of receiving deposits under any scheme/arrangement/ any manner or lending in any manner. However, this sub-section does not apply to receipt of money by relatives of individual or from relatives of partners of firm.
Person is relative of another if:
1. They are members of an HUF or
2. They are husband and wife
3. They are related as follows –
Father 2. Mother including step-mother 3. Father’s parents 4. Mother’s parents 5. Brother including step brother 6. Brother’s wife 7. Sister including step sister 7. Sister’s husband 8. Son including step son. 9. Son’s wife 10. Son’s children and their spouses 11. Daughter including step daughter 12. Daughter’s husband 13. Daughter’s children and their spouses.

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 way of	Received from	Received by
a) Share Capital	a) Any banking co. including Scheduled/ Co-operative Bank	Subscription to a client’s fund
b) Partners Capital	b) IDBI/SFC/Specified financial institution under IDBI Act/RBI Act
c) Security/Earnest Money/Advance against orders	c) Individual/firm/AOP not being a body corporate registered under any money lending enactment
d) Credits in the account on Sale of property

3. 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.

4. 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.