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Premature repayment of deposits made after the company has held the deposit for 12 months attracts interest at:
AThe original contracted rate
BThe bank rate minus 2%
C1% less than the rate contracted at the time of acceptance
DZero — interest is forfeited
Answer & Solution
Correct answer: C. 1% less than the rate contracted at the time of acceptance
1. Rule 15 — on premature repayment, interest is paid at 1% less than the contracted rate, provided the deposit has been held for at least 6 months.
2. If held for less than 6 months, premature repayment is generally not permitted (except in distress cases without interest).
3. Hence (B).
_Source: ICAI BoS CA Inter Paper 2 — Acceptance of Deposits_