Hello CCI members,
"We are public limited company in trading business. The Company's MOA include grating/accepting loans & Advances under Other Objects of the company. We have got a request from one of our regular customer for short term financial assistance in the form of loan for which we shall be charging a fixed rate of interest." My question is that can we do so being a trading concern or whether RBI Regulations as applicable to NBFC shall apply here as well????
Plz answer
Regards
You can give loan subject to compliance of Section 372A of Companies Act.
A company is treated as NBFC only if its financial assets are more than 50% of the total assets and income from financial assets is more than 50% of the gross income, which may not be there in your case.
Thanks
Thank you sir.....
One more thing can you plz clarify. Sec 372A is applicable for Intercorporate Investments. But in our case Its a non-corporate entity to whom we shall be providing loan.
This is covered in which section can you plz help me out?
Section 372A is applicable for inter-corporate loans also. However, if its is non-corporate entity, Sec.372A will not apply. Just confirm that it is not related party as per Section 295. If not, you can pass Board resolution u/s 292(1)(e) for giving loan.
Thank you so much...
CAclubindia
