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Chiranjiv (BDM)     16 July 2013

can any company give loan on 3% pa??

Can any company ( registered/un-registered) provide business, project loan or any type of loan to Individuals or companies with  a rate of 3% or 5% p.a.? Are these companies authorized to do so? Or they are just doing cheating, fraud, scam


Whereas the Saving Bank Interest rate is now more than 8% pa in the market?


 2 Replies

2BHelpfull (Other)     22 July 2013

check the article of associatiation or MOA ,if it authorise then it is valid and resolution in meeting must be passed in this behalf stating the co. or person to whom loan is provided..


Section 372A of the Companies Act, 1956 (The Act) deals with intercorporate Loan, Investment, Guarantee and Securities in connection with loan

The section applies to public companies only and thus not to private companies.



The section also does not apply loans, etc. made by the following companies:—

1.Banking, insurance or housing companies, in the ordinary course of their business;

2.Companies established with the object of financing industrial enterprises or of providing infrastructural facilities.

3. Company whose principal business is the acquisition of shares, stock, debentures or other securities.

R.V.RAO (retired)     14 February 2014

Leave alone the  procedural requirements of giving loans @3%,i wonder what is cost of the funds for  the lending  co.,  ,so that they lend @3%?

Let us assume that the  cost of funds is so cheap,that the co  is able to raise  funds @2%, and lending money@3%.

instead of taking the risk of of lending @3%and  securing such loans and collecting costs,let the co. simply deposit in Nationalised banks and earn Interest  @9% with a spread of easy 7%.why the co. is not doing this. i wish to know.

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