Scope and provision of Companies (Acceptance of Deposits) Rules, 1975 - Companies Law - Letter : No. 4/17/81,

Letter : No. 4/17/81, dated 17 ‑ 2 ‑ 1982. Subject:- Public Deposits - Acceptance of ‑ Scope and provision of Companies (Acceptance of Deposits) Rules, 1975 explained Rule 3(1)(c) : CEILING ON RATE OF INTEREST ON DEPOSIT ‑ PAYMENT OF INTEREST ON COMPOUND INTEREST ‑ WHETHER CONTRAVENES THE RULES It has been decided in consultation with the Department of Legal Affairs that the payment of compound interest or payment of interest on cumulative time deposit scheme does not contravene the ceiling on interest prescribed in the Rules. The Rules provide that no company shall accept/renew any deposit at a rate of interest exceeding 15 per cent per annum. The restriction is that at the time of acceptance of deposits no company shall offer interest of more than 15 per cent. Moreover, the rules do not specify whether the interest should be simple or compound. The term Interest is a generic term which may be simple or compound.