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Can a company accept Interest Free Loan from another unrelated Company. Is there be any violation for loan receiver under section 73-76, 186 or any other section. Kindly confirm.

Section 186- Loan and investment by company.

Posted By: Amit nowlakha 10 year(s) ago

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Expert Ankit Singhi

As per the provisions of Section 73- 76, it is exempted from the list of deposits, hence there is no question of violation would arise. Further, As per the provisions of section 186 (7) no loan shall be given at a rate of interest lower than the prevailing yield of 1/3/5/10 years Government security closet to the tenure of the loan. Thus, in the cited case there is a violation of section 186(7) of the Act.

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