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Definition of borrowings

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CS Omprakash Soni

ASSTT. MANAGER

46 Points Posted on 19 July 2014

Respected Members,

With reference to the captioned subject and pursuant to the provisions of Section 177(9) of the Companies Act, 2013, the Companies which have borrowed money from banks and public financial institutions in excess of fifty crore rupees has to establish a vigil mechanism for their directors and employees to report their genuine concerns or grievances.

However, one of our Company has availed Non Fund Based Facility in form of Bank Guarantee of Rs. 300 Crores.

In view of the above, we have a query that “whether borrowings includes both Fund Based and Non Fund Based Facility”.

Thanks & Regards

CS Omprakash Soni

Replies (1)

CS SAJU PHILIP MANALEL

Company Secretary in Practise

157 Points Posted on 19 July 2014

The relevant provisions are contained in Rule 6 of Chapter XII Rules and explanation to the said Rule provides that "The paid up share capital or turnover or outstanding loans, or borrowings or debentures or deposits, as the case may be, as existing on the date of last audited Financial Statements shall be taken into account for the purposes of this rule."

Therefore, to solve your query, you please see whether the the non-fund based facility reflected in the B/S?.