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How is control over Public deposits exercised?
The control over public deposits was exercised by introducing Sec 58A and 58B to the Companies Act, 1956 vide Amendment Act, 1974 and the announcement of Companies rules, 1975 which applies to the non banking finance companies. The main provision of these regulations regarding the applicability of term deposits is as below:
Deposits cover all types of loans and deposits excluding the following:
1) Amount received from the government, local authority, and foreign government and any amount whose repayment is guaranteed by the Government.
2) Any loans from Banks or Financial Institutions.
3) Amount received by a company from another company.
4) Security deposits from employees.
5) Advance for purchase or sales.
6) Amount received for subscribing to shares and debentures pending allotment.
7) Amounts received in trust or amounts in transit.
8) Amounts received form directors or form shareholders of a Private Limited Company.
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