Sec 185

Only if it is an NBFC and its ordinary business is to provide loans or guarantees or securities at an interest  not less than the RBI rate. Otherwise the same is strictly prohibited in the new Act.....

Section 185 specifically rohibits all the company to give any loan/ guarantee/ security to its directors or the persons in whom the director is interested.

Moreover, no company can give any loan to an indiviadual unless and untill it has obtained NBFC Certificate from RBI. Only if it is an NBFC and its ordinary business is to provide loans or guarantees or securities at an interest  not less than the RBI rate. Otherwise the same is strictly prohibited in the new Act....

However, a company can invest and provide loan under section 186 to the other corporate.

Originally posted by : MOHIT SALUJA
	Section 185 specifically rohibits all the company to give any loan/ guarantee/ security to its directors or the persons in whom the director is interested. Moreover, no company can give any loan to an indiviadual unless and untill it has obtained NBFC Certificate from RBI. Only if it is an NBFC and its ordinary business is to provide loans or guarantees or securities at an interest  not less than the RBI rate. Otherwise the same is strictly prohibited in the new Act.... However, a company can invest and provide loan under section 186 to the other corporate.

Mohit ji,

On the question "whether a corporate company can provide loans to other body corporate in which directors are interested?" the answer is no and every body is suggesting the same.

But I want to know that Sec. 295 & 372a are same to Sec. 185 & 186.

How in old act company provide loans to related company under 372a and escapes sec. 295?

Please reply