Question

Public deposits cannot exceed ______.

Options

• 10% of share capital and free reserves

• 25% of share capital and free reserves

• 50% of share capital and free reserves

• No limit

Answer 1

Public deposits cannot exceed 25% of share capital and free reserves.

Explanation:

A public corporation may accept public deposits up to 25% of its share capital and free reserves in accordance with the Companies (Acceptance of Deposits) Rules, 2014, which are governed by the Companies Act, 2013.

• The limit is in place to safeguard depositor interests and lower the company’s financial risk.
• While NBFCs are subject to different rules, private corporations are subject to much more stringent limitations.