Debenture redemption reserve

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SREENATH P.

Company secretary

208 Points Joined November 2012

Sub Rule 7 of Rule 18 of Companies (Share Capital and Debentures) Rules, 2014, Company shall required to create Debenture Redemption Reserve shall on or before the 30th day of April in each year, invest or deposit, as the case may be, a sum which shall not be less than fifteen percent, of the amount of its debentures maturing during the year ending on the 31st day of March of the next year, in any one or more of the following methods, namely:- (i) in deposits with any scheduled bank, free from any charge or lien; My query is that amount kept in current account will be treated as deposit with scheduled bank? Thanks in advance

Replies (3)

P C Agrawal

Registered independent director Past Ch

8229 Points Joined March 2007

Technically Current Account is also a deposit account and the same should be eligible for DRR also. However, you will have to maintain required 15% amount as minimum balance throughout the year. Further, if it is used for usual payments for business purpose also, compliance of Rule 18(7)(c)(v) will be difficult. In order to avoid loss of interest in current account it will be advisable to make FDR for the amount.

SREENATH P.

Company secretary

208 Points Joined November 2012

Thank you sir,

One more thing is that Company will be use that fund only for redemption purpose.

Lakshay Sethi

CS Student

21 Points Joined June 2016

Dear Sir/Ma'am,

Is it mandatory to create Debenture redemption reserve in case there is a loss in the Company ? Kindly Provide Clarification and reference to provisions of Companies Act in support of your answer.