Can a company pre-pay its public deposits?
A NBFC accepts deposits under a mutual contract with its depositors. In case a depositor requests for pre-mature payment, Reserve Bank of India has prescribed Regulations for such an eventuality in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 wherein it is specified that NBFCs cannot grant any loan against a public deposit or make premature repayment of a public deposit within a period of three months (lock-in period) from the date of its acceptance, however in the event of death of a depositor, the company may, even within the lock – in period, repay the deposit at the request of the joint holders with survivor clause / nominee / legal heir only against submission of relevant proof, to the satisfaction of the company. An NBFC subject to above provisions, if it is not a problem company, may permit after the lock–in period premature repayment of a public deposit at its sole discretion, at the rate of interest prescribed by the Bank. A
Related Questions
- UES 18. When a company’s rating is downgraded, does it have to bring down its level of public deposits immediately or over a period of time?
- When a company’s rating is downgraded, does it have to bring down its level of public deposits immediately or over a period of time?
- UES 30. Can a company pre-pay its public deposits?
