Can a company give loan to individuals

Yes a company can grant loan to any individual but there are certain restrictions under section 372A applicable only to public companies in respect of inter corporate loans.

Hi Anand,

I am looking for provisions relating to granting of loans to individuals and Sec 372A governs provisions relating to Inter Corporate loans and Investments. So can you tell me which sub section or clause are you talking about which restricts the power of granting loans to individuals under section 372A.

Regards,

Priti

Originally posted by : Priti Bharech
	Dear All,   Can anybody tell me that whether a company can give loan to individuals or not?? Please note I am not talking about NBFC's.   Kindly treat as urgent.   Regards, Priti

 Hello Priti,

A public company is required to follow the provisions of Section 295 while giving loan to Director or his relatives.

However, it can give loan to third party.

Views of other members are solicited.

Dear All,

Thanks for the reply. My main focus is on loan given by companies to individuals other than the Directors.

So can anyone emphasise on this in particular.

Regards,

Priti
 

Loans can be given to individuals. The rate of interest and terms of the loans should not be prejudicial to the interest of the Company. There is no restriction on loans to individuals - be it employees or other vendors etc.

The Company, however, should not start lending as a seperate line of business unless it has the necessary permissions from RBI and the MOA is amended.

Thanks for the reply.

Can you please tell me where is it exactly mentioned that there is no restriction on companies giving loans to individuals. I mean any section that specifically refers to the same.

There is no provision in the act, which specifically allows or disallows giving loans to individuals.

I agree with Mr Raseh. ....It is neither restricted nor specified in the Companies Act when it comes to the matter of granting loans to individulas like employees.

ya company can give loan to individual, iam working in public limited company and we give loans to our employees, so absolutely answer is yes

Thank you all for your replies.

Regards,

Priti

I agree with Mr Raseh

the company can give loans to individuals without any restrictions

Company can grant the Loan to Individual, But It has to give strong reason, Why It is giving the Loan, Because the Company’s Main Object is something else.