The document discusses the borrowing powers and restrictions on borrowing for companies under Indian law. It provides details on: - Companies have implied power to borrow, while non-trading companies must include this power in their memorandum. - The key restrictions on borrowing include limits based on paid-up capital and reserves, and requirements for shareholder authorization for amounts over these limits. - Borrowings must be registered within 30 days for charges over specific assets like property or within 300 days with a late fee. Lenders can also register in some cases. The registrar issues certificates of registration and satisfaction.

1. Borrowing Powers Page 1
Assignment - 5
Company Law
Date of Submission: 16 September,2015
Submitted by: Sonali
Class: BBA
Roll No: BBA/13/913
Email:snlkkrj000@gmail.com

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1 Explain the borrowing powers of a company? When can a company
lawfully borrow money? What are the restrictions on borrowing powers of
a company?
Every trading company has an implied power to borrow, as borrowing is implied in the object for which it
is incorporated. A trading company can exercise this power even if it is not included in the Memorandum.
However non-trading company has no implied power to borrow and such power can be taken by it
implied power to borrow and such power can be taken by it by including a clause to that effect in the
Memorandum.
Definition
The ability to borrow more funds. A person or company with a great deal in assets and little in debt is
likely to have greater borrowing power than a person or company in the opposite position.
Restrictions on borrowing power
• A public company can borrow only after the receipt of Commencement Certificate. [Section
149(1)]. But a
• Private company can borrow immediately after the incorporation
The Board of Directors may borrow moneys by passing a resolution passed at the meetings of the Board.
The board may delegate its borrowing powers to a Committee of Directors. Such a resolution should
specifically mention the aggregate amount upto which the moneys can be borrowed by the Committee,
the Managing Director, Manager or any other principal officer of the company on such conditions as it
may prescribe [Section 292 (1) (c)]
 The moneys borrowed together with the moneys already borrowed by the company (excluding
loans obtained from banks i.e. working capital) shall not exceed the aggregate of the paid up
capital and the free reserves. [Section 293(1)(d)]
 It may be noted that a company may borrow in excess of its paid up capital and free reserves if it
is so consented and authorized by the shareholders at a general meeting.
 Transactions, which are not borrowing
 Temporary loans (repayable within six months or on demand) obtained from the company’s
banker in the ordinary course of business.
 Borrowing of money by a banking company in the ordinary course of business.
 Hire purchase and leasing transactions.
 Purchase of machinery on deferred payment.

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Ultra Vires Borrowing
• A Company is said to resort to ultra vires borrowing if it exceeds the authority given to it in this
respect by the Companies Act, the Memorandum and the Articles of the company. An act of
borrowing by the company may be ultra vires (outside the power of) the company or ultra vires
the directors or ultra vires the Articles.
• Void ab initio borrowings - Where such loan is ultra vires the company, such loan is null and void
and does not create an actionable debt. Any securities given in respect thereof are inoperative.
Thus, the lender cannot sue the company for the return of the loan and shall be under an
obligation to return back the securities, if any.
However, if the lender has acted in good faith that is without any knowledge that the company borrowed
the money beyond its powers, he may have the following remedies
1. Injunction- If the company has not spent the money so borrowed, the lender may obtain an
injunction order against the company restraining it from spending the amount and recover the
same.
2. Restitution- If the money has been invested in some particular asset, he may claim that asset, or if
such asset cannot be ascertained he may claim that any increase in the assets as a result of such
borrowing be restored to him in the even of a winding up.
3. Subrogation- If the money has been applied in paying off some debts of the company, he is
entitled to step into the shoes of the creditors so paid off and can rank as a creditor of the
company to the extent of the money so applied.
4. Suit for breach of warranty- The lender may sue the directors personally for breach of implied
warranty of authority and claim damages for the same.
5. Ratification of borrowing- If the borrowing power exercised by the company is ultra vires the
Memorandum, that is beyond the powers given to its by the Memorandum, such borrowing
cannot be ratified afterwards in any way, even by a unanimous resolution of the shareholders in a
general meeting.

4. Borrowing Powers Page 4
But if the borrowing is ultra vires the Articles, but intra views the Memorandum the act of borrowing can
be ratified by the shareholders in general meeting by altering the Articles or by passing a resolution as per
Articles.
If the borrowing is ultra vires the directors but intra vires the Memorandum, that is within the powers
given by the Memorandum but beyond the authority of the directos, the company in general meeting may
ratify such act of the directors. In that case the debt will be valid and binding on the company.
BORROWINGS & CHARGES
Even if the borrowing is not ratified by the company, the lender in good faith will be protected since the
directors in borrowing the money had acted as agent of the company. However in that case the directors
will be liable to indemnify the company against the loss incurred thereby.
• Even in the case of unauthorized borrowings, the company will be liable to repay, I it is shown
that the money had gone into company’s pocket [Lakshmi Ratan Cotton Mills Co. Ltd v. J K Jute
Mills Co; Ltd (1957) 27 Comp. Cas. 660 (All).]
CHARGES
• Borrowing has become an equally important method along with share capital of financing
projects. Corporate borrowing has its own peculiarities. No single individual may in normal
circumstances be in a position to meet the loan requirements of a company. Loan-money has,
therefore, to be raised from a large number of individuals very much in the same way as share
capital. Loans may have to be obtained in a sequence one after the other.
• The problem was solved by the evolution, on the one hand, of debentures and, on the other, of the
concept of floating charge, both being reserved only for the corporate sector. The same assets are
charged to several lenders and also to several lenders in a series. That raises a question as to who
shall have priority. This gave rise to the concept of pari passu ranking. Since other trade creditors
have also to seek payment only out of the company's assets, the problem had to be tackled as to
how they should know, before supplying more credit, what assets would be available as security
for their payments?
• The Act prescribes for registration of charges with the Registrar of Companies, and also gives a
list of assets a charge on which must be registered. Registration of charges identifies the assets,
which are subject to the charge. It becomes a source of knowledge, and, therefore, operates as
constructive notice and a protection, to "all classes of persons interested in knowing the assets
position of the company. It makes the charge effective against all quarters including the
liquidator.

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Types of charges
1. Fixed charge - a charge is fixed when it is made specifically to cover definite an ascertained assets of
permanent nature such as land, building, o heavy machinery. A fixed charge passes legal title to certain
specific assets and the company loses the right to dispose of the property unencumbered, though the
company retains possession of the property.
2. Floating charge – it is a charge on the current assets of the company, present or future which changes
from time to time in the ordinary course of business e.g. stock in trade, bills receivable, cash in hand,
work in progress, goods in transit, inventory etc.
(i) When the company goes into liquidation;
(ii) When the company ceases to carry on the business;
(iii) When the creditors or the debenture holders take steps to enforce this security e.g. by
appointing receiver to take possession of the property charged;
(iv) On the happening of the even specified in the deed.
Registration of charges[Section 125]
• The security created and charged for the following purposes must be registered with the ROC
within 30 days (or further period of 30 days with additional fees) after the date of their creation:
(i) Securing any issue of debentures;
(ii) Uncalled share capital of the company;
(iii) Any immovable property;
(iv) Book debts, stock in trade or other current assets of the company;
(v) Any movable property (not being a pledge);
(vi) Calls made but not paid;
(vii) IPRs of the company.
• The ROC shall with respect to each company maintain a Register of charges containing all the
specified particulars. Upon registration of charge by the company, ROC shall issue a Certificate
of charges, which shall be conclusive evidence.

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Memorandum of satisfaction[Section 138-140]
• On payment or satisfaction of any charge in full, the company must notify the fact to the ROC within 30
days from the date of such payment or satisfaction. The ROC shall on receipt thereof, shall record the
same after send due notice to the concerned creditor and on receipt on him being satisfied (the creditor
may issue NOC to the satisfaction) shall register the satisfaction of the charge. A memorandum of
satisfaction shall be entered in the Register by the ROC.
The Central Government has been empowered to extend time for registration of charge or satisfaction of
charge of issue of debenture of a series and to order that the omission or mis-statement in the Register of
Charges be rectified.

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2 What are the provisions of companies act respect of registration &
satisfaction of charges?
In exercise of the powers conferred under sections 77, 78, 79, 81, 82, 83, 84, 85, 87 read with section 469
of the Companies Act, 2013 (18 of 2013) and in supersession of the Companies (Central Government’s)
General Rules and Forms, 1956 or any other relevant rules prescribed under the Companies Act, 1956 (1
of 1956) on matters covered under these rules, except as respects things done or omitted to be done before
such supersession, the Central Government hereby makes the following rules, namely: –
1. Short title and commencement.-
(1) These rules may be called the Companies (Registration of Charges) Rules, 2014.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Definitions.-
(1) In these rules, unless the context otherwise requires,- (a) ‘‘Act’’ means the Companies Act,
2013 (18 of 2013); (b) ‘‘Annexure’’ means the Annexure appended to these rules; (c) ‘‘Fees’’ means the
fees as specified in the Companies (Registration offices and fees) Rules, 2014; (d) ‘‘Form’’ or “eforms”
means form set forth in Annexure to these rules which shall be used for the matter to which it relates; (e)
‘‘Regional Director’’ means the person appointed by the Central Government in the Ministry of
Corporate Affairs as a Regional ‘Director; (f) ‘‘section’’ means the section of the Act.
(2) Words and expressions used in these rules but not defined and defined in the Act or in
Companies (Specification of definitions details) Rules, 2014 shall have the meanings respectively
assigned to them in the Act and said rules.
3. Registration of creation or modification of charge
(1) For registration of charge as provided in sub-section (1) of section 77, section 78 and section
79, the particulars of the charge together with a copy of the instrument, if any, creating or modifying the
charge in Form No.CHG-1 (for other than Debentures) or Form No.CHG-9 (for debentures including
rectification), as the case may be, duly signed by the company and the charge holder and filed with the
Registrar within a period of thirty days of the date of creation or modification of charge along with the
fee.
(2) If the particulars of a charge are not filed within the aforesaid period, but filed within a period
of three hundred days of the date of such creation or modification, the additional fee shall be levied.
(3) If the company fails to register the particulars of the charge with the Registrar within the
period of thirty days of its creation or modification, the particulars of the charge together with a copy of
the instrument, if any, creating or modifying such charge may be filed by the charge-holder, in Form
No.CHG-1 or Form No.CHG-9, as the case may be, duly signed along with fee.

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(4) A copy of every instrument evidencing any creation or modification of charge and required to
be filed with the Registrar in pursuance of section 77, 78 or 79 shall be verified as follows- (a) where the
instrument or deed relates solely to the property situated outside India, the copy shall be verified by a
certificate issued either under the seal of the company, or under the hand of any director or company
secretary of the company or an authorised officer of the charge holder or under the hand of some person
other than the company who is interested in the mortgage or charge; (b) where the instrument or deed
relates, whether wholly or partly, to the property situated in India, the copy shall be verified by a
certificate issued under the hand of any director or company secretary of the company or an authorised
officer of the charge holder.
4. Condonation of delay by Registrar.-
(1) The Registrar may, on being satisfied that the company had sufficient cause for not filing the
particulars and instrument of charge, if any, within a period of thirty days of the date of creation of the
charge, allow the registration of the same after thirty days but within a period of three hundred days of the
date of such creation of charge or modification of charge on payment of additional fee.
(2) The application for delay shall be made in Form No.CHG-10 and supported by a declaration
from the company signed by its secretary or director that such belated filing shall not adversely affect
rights of any other intervening creditors of the company.
5. Application of rules in certain matters.-
The provisions of rule 4 shall apply, mutatis mutandis, to the registration of charge on any
property acquired subject to such charge and modification of charge under section 79 of the Act.
6. Certificate of registration. –
(1) Where a charge is registered with the Registrar under sub-section (1) of section 77 or section
78, he shall issue a certificate of registration of such charge in Form No.CHG-2
(2) Where the particulars of modification of charge are registered under section 79, the Registrar
shall issue a certificate of modification of charge in Form No. CHG-3
(3) The certificate issued by the Registrar under sub-rule (1) and sub-rule (2) shall be conclusive
evidence that the requirements of Chapter VI of the Act and the rules made there under as to registration
of creation or modification of charge, as the case may be, have been complied with.
7. Register of charges to be kept by the Registrar.-
(1) The particulars of charges maintained on the Ministry of Corporate Affairs portal
(www.mca.gov.in/MCA21)shall be deemed to be the register of charges for the purposes of section 81 of
the Act.
(2) The register shall be open to inspection by any person on payment of fee.

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8. Satisfaction of charge.-
(1) A company shall within a period of thirty days from the date of the payment or satisfaction in
full of any charge registered under Chapter VI, give intimation of the same to the Registrar in Form
No.CHG-4 along with the fee.
(2) Where the Registrar enters a memorandum of satisfaction of charge in full in pursuance of
section 82 or 83, he shall issue a certificate of registration of satisfaction of charge in Form
No.CHG-5.
9. Intimation of appointment of Receiver or Manager.-
The notice of appointment or cessation of a receiver of, or of a person to manage, the property,
subject to charge, of a company shall be filed with the Registrar in Form No. CHG.6 along with fee.
10. Company’s register of charges.-
(1) Every company shall keep at its registered office a register of charges in Form No. CHG.7 and
enter therein particulars of all the charges registered with the Registrar on any of the property, assets or
undertaking of the company and the particulars of any property acquired subject to a charge as well as
particulars of any modification of a charge and satisfaction of charge.
(2) The entries in the register of charges maintained by the company shall be made forthwith after the
creation, modification or satisfaction of charge, as the case may be.
(3) Entries in the register shall be authenticated by a director or the secretary of the company or any
other person authorised by the Board for the purpose.
(4) The register of charges shall be preserved permanently and the instrument creating a charge or
modification thereon shall be preserved for a period of eight years from the date of satisfaction of charge
by the company. 11. Register open for inspection.- The register of charges and the instrument of charges
kept by the company shall be open for inspection- (a) by any member or creditor of the company without
fees; (b) by any other person on payment of fee. 12. Condonation of delay and rectification of register of
charges.- (1) Where the instrument creating or modifying a charge is not filed within a period of three
hundred days from the date of its creation (including acquisition of a property subject to a charge) or
modification and where the satisfaction of the charge is not filed within thirty days from the date on
which such payment of satisfaction, the Registrar shall not register the same unless the delay is condoned
by the Central Government. (2) The application for condonation of delay and for such other matters
covered in sub-clause (a),(b) and (c) of clause (i) of sub-section (1) of section 87 of the Act shall be filed
with the Central Government in Form No.CHG-8 along with the fee. (3) The order passed by the Central
Government under sub-section (1) of section 87 of the Act shall be required to be filed with the Registrar
in Form No.INC.28 along with the fee as per the conditions stipulated in the said order. - See more at:
http://taxguru.in/company-law/companies-act-2013-companies-registration-charges-rules-
2014.html#sthash.BFE4Cfcm.dpuf

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3 State the rules regarding acceptance of deposit by a company.
Acceptance Of Deposits By Companies Under Companies Act, 2013
Non applicability
The provisions relating to acceptance of deposits as in the Act and the rules made there under shall not
applicable to the following companies:
 A banking company;
 A non banking financial company as defined in the Reserve Bank of India Act, 1934 registered
with the Reserve Bank of India;
 A housing finance company registered with National Housing Bank established under the
National Housing Banking Act; and
 A company specified by the Central Government under the proviso to Section 73(1) of the Act.
The provisions relating to acceptance of deposits are applicable to the companies other than specified
above.
Rule 2(1)(e) defines the term ‘eligible company’ as a public company as referred to in Section
76(1)having a net worth of not less ₹ 100 crores or a turnover of not less than ₹ 500 crores and which has
obtained the prior consent of the company in general meeting by means of a special resolution with the
Registrar of Companies before making any invitation to the Public for acceptance of deposits.
Section 76(1) provides that notwithstanding anything contained in Section 73, a public company, having
such net worth or turnover as may be prescribed, may accept deposits from persons other than its
members subject to compliance with the requirements provided in Section 73 (2) and subject to such rules
as the Central Government may, in consultation with the Reserve Bank of India prescribe. Such a
company shall be required to obtain the rating from a recognized credit rating agency for informing the
public the rating given to the company at the time of invitation of deposits from the public which ensures
adequate safety and the rating shall be obtained for every year during the tenure or deposits. The
company accepting secured deposits from the public shall within 30 days of such acceptance, create a
charge on its assets of an amount not less than the amount of deposits accepted in favor of the deposit
holders in accordance with such rules as may be prescribed.

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Definition of ‘deposit’
Rule 2(c) defines the term ‘deposit’ as including any receipt of money by way of deposit or loan or in any
other form by a company. The deposit does not include-
Any amount received from-
Central government or a State Government; or any amount received from any other source whose
repayment is guaranteed by the Central Government or a State Government; or any amount received from
a local authority; or any amount received from a statutory authority constituted under an Act of
Parliament or a State Legislature;
Any amount received from-
Foreign Governments;
Foreign or international banks;
Multilateral financial institutions, including but not limited to International Financial Corporation, Asian
Development Bank, Common wealth Development Corporation and International Bank for Industrial and
Financial Reconstruction;
Foreign Governments owned development financial institutions;
Foreign export credit agencies;
Foreign collaborators;
Foreign corporate bodies and foreign citizens;
Foreign authorities or persons resident outside India subject to the provisions of Foreign Exchange
Management Act, 1999 and rules and regulations made there under;
Any amount received as a loan or facility from-
Any banking company or
State Bank of India or any of its subsidiary banks ; or
A banking institution notified by the Central Government under Section 51 of the Banking Regulation
Act, 1949; or
A corresponding new bank as defined in Clause (d) of Section 2 of the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970; or in clause (b) of Section 2 of the Banking (Acquisition and
Transfer of Undertaking) Act, 1980; or
A co-operative bank as defined in Clause (b-ii) of Section 2 of the Reserve Bank of India Act, 1934.
Any amount received as a loan or financial assistance from Public Financial Institutions notified by the
Central Government in this behalf in consultation with the Reserve Bank of India or any regional

12. Borrowing Powers Page 12
financial institutions or Insurance companies or scheduled banks as defined in the Reserve Bank of India
Act;
Any amount received against issue of commercial paper or any other instruments issued in accordance
with the guidelines or notification issued by the Reserve Bank of India;
Any amount received by a company from any other company;
Any amount received and held pursuance to an offer made in accordance with the provisions of the Act
towards subscription to any securities, including share application money or advance towards allotment of
securities pending allotment, so long as such amount is appropriated only against the amount due on
allotment of the securities applied for. For this purpose it is clarified by the Central Government that-
Without prejudice to any other liability or section, if the securities for which application money or
advance for such securities was received cannot be allotted within 60 days from the date of receipt of the
application money or advance for such securities and such application money or advance is not refunded
to the subscribers within 15 days from the date of completion of 60 days, such amount shall be treated as
a deposit under these rules. It is provided (newly inserted proviso with effect from 31.03.2015) unless
otherwise required under the Companies Act, 1956 or the SEBI Act, 1992 or rules or regulations made
there under to allot any share, stock, bond or debenture within a specified period, if a company had
received any amount by way of subscriptions to any shares, stock, bonds or debentures before 01.04.2014
and disclosed it in the balance sheet for the financial year ending on or before 31.03.2014 against which
the allotment is pending on 31.03.2015, the company shall, by 01.06.2015 either return such amounts to
the persons from whom these were received or allot shares, stock, bonds or debentures or comply with
these rules;
Any adjustment of the amount for any other purpose shall not be treated as refund.
Any amount received from a person who, at the time of receipt of th amount, was a director of the
company. The director from whom money is received, furnishes to the company at the time of giving the
money, a declaration in writing to the effect that the amount is not being given out of funds acquired by
him by borrowing or accepting loans or deposits from others;
Any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari
passu with the first charge on any assets referred to in Schedule III of the Actexcluding intangible assets
of the company or bonds or debentures compulsorily convertible into shares of the company within five
years. If such bonds or debentures are secured by the charge of any assets referred to in Schedule III of
the Act, excluding intangible assets, the amount of such bonds or debentures shall not exceed the market
value of such assets as assessed by a registered valuer.
Any amount received from an employee of the company not exceeding his annual salary under a contract
of employment with the company in the nature of non interest bearing security deposit;
Any non interest bearing amount received or held in trust;

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Any amount received in the course of, or for the purposes of, the business of the company- as an advance
for the supply of goods or provision of services accounted for in any manner whatsoever provided that
such advance is appropriated against supply of goods or provision of services within a period of 365 days
from the date of acceptance of such advance. In case any advance which is subject matter of any legal
proceedings before any court of law, the said time limit of these 365 days shall not apply; an advance
accounted for in any manner whatsoever, received in connection with consideration for an immoveable
property under an agreement or arrangement, provided that such advance is adjusted against such
property in accordance with the terms of agreement or arrangement; as security deposit for the
performance of the contract for supply of goods or provision fo services; as advance received from long
term projects for supply of capital goods except those covered under the item (b) above. If the amount
received under items (a), (b) and (d) above becomes refundable, with or without interest, due to the
reasons that the company accepting the money does not have necessary permission or approval, wherever
required, to deal in the goods or properties or services for which the money is taken, then the amount
received shall be deemed to be a deposit under these rules.
For the purposes of this sub clause the amount referred to in the proviso shall be deemed to be deposits on
the expiry of 15 days from the date they become due for refund.
Any amount brought by the promoters of the company by way of unsecured loan in pursuance of the
stipulation of any lending financial institution or a bank subject to fulfillment of the following conditions
namely:
The loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to
contribute such finance;
The loan is provided by the promoters themselves or by their relatives or by both; and
The exemption under this sub clause shall be available only till the loans of financial institution or bank
are repaid and not thereafter;
Any amount accepted by a Nidhi company in accordance with the rules made under Section 406 of the
Act. For this purpose any amount-
Received by the company, whether in the form of installments or otherwise, from a person with a promise
or offer to give returns, in cash or in kind, on completion of the period specified in the promise or offer, or
earlier, accounted for in any matter whatsoever; or
Any additional contributions, over and above the amount under above made by the company as part of
such promise or offer shall be treated as a deposit.

14. Borrowing Powers Page 14
Conditions prescribed for accepting deposits
Section 73(2) provides that the company may, subject to the passing of resolution in general meeting; and
such rules as may be prescribed by the Central Government in consultation with the Reserve Bank of
India, accept deposits from its members on such terms and conditions including the provision of security,
if any, or for the repayment of such deposits with interest, as may be, agreed upon between the company
and its members. The acceptance of deposits under this Section is subject to the following conditions: a
circular shall be issued to its members which include a statement showing- the financial position of the
company; the credit rating obtained; the total number of depositors; and the amount due towards deposits
in respect of any previous deposits accepted by the company; and such other particulars in such form and
in such manner as may be prescribed; filing a copy of the circular along with such statement with the
Registrar within 30 days before the date of issue of the circular; depositing such sum which shall not be
less than 15% of the amount of the deposit maturing during a financial year and the financial year next
following and kept in a scheduled bank in a separate bank account to be called as deposit repayment
reserve account; providing such deposit insurance in such manner and to such extent as may be
prescribed; certifying that the company has not committed in any default in the repayment of deposits
accepted either before or after the commencement of this Act or payment of interest on such deposits; and
providing security, if any for the due repayment of the amount of deposit or the interest thereon including
the creation of such charge on the property or assets of the company.
In case where a company does not secure the deposits or secures such deposits partially, then, the
deposits shall be termed as ‘unsecured deposits’ and shall be so quoted in every circular, form,
advertisement or in any document related to invitation or acceptance of deposits.
Rule 3 provides for the terms and conditions for acceptance of deposits by the companies. The said Rule
provides that with effect from 01.04.2014, no company under Section 73(2) and no eligible company
shall-
accept or renew any deposit whether secured or unsecured, which is repayable on demand or upon
receiving a notice within a period of less than 6 months or more than 36 months from the date of
acceptance or renewal of such deposits; accept or renew-any deposit from its members, if the amount of
such deposits together with the amount of deposits outstanding as on the date of acceptance or renewal of
such deposits from members exceeds 10% of the aggregate of the paid up share capital and free reserves
of the company;
any other deposit, if the amount of such deposit together with the amount of such other deposit, if the
amount referred to in the above clause, outstanding on the date of acceptance or renewal exceeds 25% of
aggregate or the paid up share capital and free reserves of the company; invite or accept or renew any
deposit in any form, carrying a rate of interest or pay brokerage thereon at a rate exceeding the maximum
rate of interest or brokerage prescribed by the Reserve Bank of India for acceptance of deposits by non
banking financial companies. The Central Government clarified that the person who is authorized, in
writing, by a company to solicit deposits on its behalf and through whome deposits are actually procured
shall only be entitled to the brokerage and payment of brokerage to any other person for procuring
deposits shall be deemed to be in violation of these rules.

15. Borrowing Powers Page 15
The other conditions are as follows: If the depositors wants, the deposits may be accepted in joint
names not exceeding three, with or without any of the clauses, namely ‘jointly; , ‘either or survivor’, ‘first
named or survivor’ ‘anyone or survivor’;
A company may, for the purpose of meeting any of its short term requirements of funds, accept or renew
such deposits for repayment earlier than 6 months from the date of such deposit or renewal as the case
may be subject to the condition that-
Such deposits shall not exceed 10% of the aggregate of the paid up share capital and free reserves of the
company; and
Such deposits are repayable not earlier than three months from the date of such deposits or renewal
thereof;
No Government company eligible to accept to accept deposits shall accept or renew any deposit, if the
amount of such deposits together with the amount of other deposits outstanding as on the date of
acceptance or renewal exceeds 35% of the aggregate of its paid up share capital and free reserves of the
company;
The company shall not reserve to itself either directly or indirectly a right to alter, to the prejudice or
disadvantage of the depositor, any of the terms and conditions of the deposit, deposit trust deed and
accept insurance contract after circular or in the form of advertisement is issued and deposits are
accepted.
Every eligible company shall obtain, at least once in a year, credit rating for deposits accepted by it with
effect from 31.03.2015.
Name of agency
Minimum investment credit rating
The Credit Rating Information Services of India Limited
FA- (FA Minus)
ICRA Limited
MA- (MA Minus)
Credit Analysis and Research Limited
CARE BBB(FD)
Fitch Ratings India Private Limited
tA-(ind)(FD)

16. Borrowing Powers Page 16
4 If a company borrows beyond its powers, what remedies are open to a
person who has lent money to the company?
LENDERS’ RIGHTS AND REMEDIES
Rights and Remedies.
While an Event of Default occurs and continues Lenders may, without notice or demand, do any or all of
the following:
(a) declare all Obligations immediately due and payable (but if an Event of Default described in Section
8.5 occurs all Obligations are immediately due and payable without any action by Lenders);
(b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any
other agreement between Borrower and any Lender;
(c) [Reserved];
(d) terminate any foreign exchange contracts among Borrower and any Lender;
(e) settle or adjust disputes and claims directly with Account Debtors for amounts on terms and in any
order that Lenders consider advisable, notify any Person owing Borrower money of Lenders’ security
interest in such funds, and verify the amount of such account;
(f) make any payments and do any acts Lenders consider necessary or reasonable to protect the Collateral
and/or Lenders’ security interest in the Collateral. Borrower shall assemble the Collateral if Lenders
request and make it available as Lenders designate. Lenders may enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or
compromise any Lien which appears to be prior or superior to Lenders’ security interest and pay all
expenses incurred. Borrower grants each Lender a license to enter and occupy any of Borrower’s
premises, without charge, to exercise any of Lenders’ rights or remedies;
(g) apply to the Obligations any (i) balances and deposits of Borrower any Lender holds, or (ii) amount
held by any Lender owing to or for the credit or the account of Borrower;
(h) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the
Collateral. Each Lender is hereby granted a non-exclusive, royalty-free license or other right to use,
without charge, Borrower’s labels, patents, copyrights, mask works, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any similar property as it
pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and,
in connection with Lenders’ exercise of their rights under this Section, Borrower’s rights under all
licenses and all franchise agreements inure to each Lender’s benefit;
(i) place a “hold” on any account maintained with any Lender and/or deliver a notice of exclusive control,
any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;

17. Borrowing Powers Page 17
(j) demand and receive possession of Borrower’s Books; and
(k) exercise all rights and remedies available to any Lender under the Loan Documents or at law or
equity, including all remedies provided under the Code (including disposal of the Collateral pursuant to
the terms thereof).
Power of Attorney.
Borrower hereby irrevocably appoints each Lender as its lawful attorney-in-fact, exercisable upon the
occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any
checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading
for any Account or drafts against Account Debtors; (c) settle and adjust disputes and claims about the
Accounts directly with Account Debtors, for amounts and on terms Lenders determine reasonable; (d)
make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien,
charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral
into the name of any Lender or a third party as the Code permits. Borrower hereby appoints each Lender
as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue
the perfection of Lenders’ security interest in the Collateral regardless of whether an Event of Default has
occurred until all Obligations have been satisfied in full and no Lender is under further obligation to make
Credit Extensions hereunder. Lenders’ foregoing appointment as Borrower’s attorneys in fact, and all of
Lenders’ rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Lenders’ obligations to provide Credit Extensions terminate.
Protective Payments.
If Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay any premium thereon or
fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan
Document, Lenders may obtain such insurance or make such payment, and all amounts so paid by
Lenders are Lender Expenses and immediately due and payable, bearing interest at the then highest
applicable rate, and secured by the Collateral. Lenders will make reasonable efforts to provide Borrower
with notice of Lenders obtaining such insurance at the time it is obtained or within a reasonable time
thereafter. No payments by Lenders are deemed an agreement to make similar payments in the future or
Lenders’ waiver of any Event of Default.

18. Borrowing Powers Page 18
Application of Payments and Proceeds.
Borrower shall have no right to specify the order or the accounts to which Lenders shall allocate or apply
any payments made by Borrower to any Lender or otherwise received by any Lender under this
Agreement when any such allocation or application is not specified elsewhere in this Agreement. If an
Event of Default has occurred and is continuing, Lenders may apply any funds in their possession,
whether from Borrower account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, and may apply any set off, to the
Obligations in such order as Lenders shall determine in their sole discretion. Any surplus shall be paid to
Borrower or other Persons legally entitled thereto; Borrower shall remain liable to Lenders for any
deficiency. If Lenders, in their good faith business judgment, directly or indirectly enter into a deferred
payment or other credit transaction with any purchaser at any sale of Collateral, Lenders shall have the
option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase
price or deferring the reduction of the Obligations until the actual receipt by Lenders of cash therefor.
Lender’s Liability for Collateral.
So long as a Lender complies with reasonable banking practices regarding the safekeeping of the
Collateral in the possession or under the control of such Lender, such Lender shall not be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.
No Waiver; Remedies Cumulative.
No Lender’s failure, at any time or times, to require strict performance by Borrower of any provision of
this Agreement or any other Loan Document shall waive, affect, or diminish any right of any Lender
thereafter to demand strict performance and compliance herewith or therewith. No waiver hereunder shall
be effective unless signed by Lenders and then is only effective for the specific instance and purpose for
which it is given. Lenders’ rights and remedies under this Agreement and the other Loan Documents are
cumulative. Lenders have all rights and remedies provided under the Code, by law, or in equity. Any
Lender’s exercise of one right or remedy is not an election, and Lenders’ waiver of any Event of Default
is not a continuing waiver. No Lender’s delay in exercising any remedy is a waiver, election, or
acquiescence.
Demand Waiver.
Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by any Lender on which Borrower is liable.

19. Borrowing Powers Page 19
Agents.
The Lenders may from time to time authorize, in writing (which writing may include, without limitation,
any intercreditor agreement entered into among the Lenders) any one or more of the Lenders as Lenders’
agent(s) to perform any of the Lender’s obligations under the Loan Documents and/or to receive
payments due to or effectuate or enforce any rights and remedies of Lenders under the Loan Documents,
and upon such authorization the Lender so authorized shall have the authority to act for Lenders to the
extent specified in such writing until such authority is revoked by the Lenders. For example (and not in
limitation of the generality of the foregoing), the Lenders may authorize one of the Lenders to act as
collateral agent for purposes of (a) perfecting the Lenders’ security interest in Collateral or (b) upon the
occurrence of an Event of Default hereunder, acting for Lenders in collecting, taking possession of, or
disposing of Collateral pursuant to Division 9 of the Code.
Shared Collateral, Payments and Proceeds.
The Borrower acknowledges and agrees that, notwithstanding the fact that the obligations of the Lenders
to make their respective Term Loans are several and not joint, the Term Loans and other Obligations
owed to the Lenders are secured by the same Collateral, and that such Term Loans and other Obligations
may, at the option of Lenders, be treated as if they were owed to a single secured party, or an agent for
Lenders, for purposes of enforcing the Lenders’ rights and remedies. As examples (and not in limitation
of the generality of the foregoing), for purposes of a disposition of Collateral under Division 9 of the
Code, (a) Lenders or Lenders’ agent may, at the option of Lenders, credit bid the aggregate of the Term
Loans and other Obligations owed to the Lenders, and (b) the Borrower may not exercise any right it may
have to tender debt for purposes of redeeming Collateral by tendering less than the aggregate of the Term
Loans and other Obligations owed to the Lenders. In addition, the Borrower acknowledges and agrees
that the Lenders may agree among themselves pursuant to an intercreditor or other agreement that
payments and proceeds received with respect to the Obligations and/or the Collateral may be allocated in
a certain way among the Lenders and that, for this purpose, a payment or proceed received by one Lender
may be delivered to another Lender for application to the Obligations owed that Lender and in furtherance
thereof payments and proceeds may be applied and reversed and re-applied.