cs executive capital and security market notes Q What is deposit and public deposit
Posted on 15-04-2016
Q What is deposit and public deposit? Is it defined anywhere?
The term 'deposit' is defined under Section 45 I(bb) of the RBI Act,1934. 'Deposit' includes and shall be deemed always to have included anyreceipt of money by way of deposit or loan or in any other form but does notinclude:
amount raised by way of share capital, or contributed as capital by partners ofa firm;
amount received from scheduled bank, co-operative bank, a banking company,State Financial Corporation, IDBI or any other institution specified by RBI;
amount received in ordinary course of business by way of security deposit,dealership deposit, earnest money, advance against orders for goods, propertiesor services;
amount received by a registered money lender other than a body corporate;
amount received by way of subscripttions in respect of a 'Chit'.
Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of PublicDeposits ( Reserve Bank) Directions, 1998 defines a ' public deposit' as a'deposit' as defined under Section 45 I(bb) of the RBI Act, 1934 and furtherexcludes the following:
amount received from the Central/State Government or any other source whererepayment is guaranteed by Central/State Government or any amount received fromlocal authority or foreign government or any foreign citizen/authority/person;
any amount received from financial institutions;
any amount received from other company as inter-corporate deposit;
amount received by way of subscripttions to shares, stock, bonds or debenturespending allotment or by way of calls in advance if such amount is not repayableto the members under the articles of association of the company;
amount received from shareholders by private company;
amount received from directors or relative of the director of a NBFC;
amount raised by issue of bonds or debentures secured by mortgage of anyimmovable property or other asset of the company subject to conditions;
the amount brought in by the promoters by way of unsecured loan;
amount received from a mutual fund;
any amount received as hybrid debt or subordinated debt;
any amount received by issuance of Commercial Paper.
Thus, the directions have sought to exclude from the definition of publicdeposit amount raised from certain set of informed lenders who can makeindependent decision.