Correspondence with Depositors | Aster Classes

Chapter 8, Correspondence with Depositors, sp, secretarial practice, maharashtra board, fyjc, 11th std,

Select the correct answer from the options given below and rewrite the statement.

1.Depositors are ______ of a company.

Options
  • Members
  • Creditors
  • Debtors

2.Depositors provide ______ Capital to the company.

Options
  • Short Term
  • Long Term
  • Medium term

3.A Company cannot accept deposit for more than ______ months.

Options
  • 24
  • 36
  • 45

4.A company cannot accept deposit for less than ______ months.

Options
  • 6
  • 3
  • 5

5.Deposits are ______ loans of the company.

Options
  • fixed
  • short term
  • long term

6.Public Deposits are accepted to meet the requirement of ______ Capital.

Options
  • fixed
  • working
  • owned

7.______ has the power to invite deposits from Public.

Options
  • Shareholders
  • Auditors
  • Board of Directors

8.Rate of interest on deposits is ______.

Options
  • fixed
  • fluctuating
  • moderate

9.The return or income for the investment of money on deposits is called ______.

Options
  • Dividend
  • Interest
  • Discount

Match the pairs.

Group ‘A’Group ‘B’
a) Depositors1) Fixed
b) Rate of Interest on Deposits2) Evidence of ownership
c) Deposit Receipt3) Debtors
 4) Creditors
 5) Evidence of deposit
 6) Fluctuating

SOLUTION

Group ‘A’Group ‘B’
a) Depositors4) Creditors
b) Rate of Interest on Deposits1) Fixed
c) Deposit Receipt5) Evidence of deposit

Write a word or a term or a phrase which can substitute the following statement.

1.Return on investment on deposit.

SOLUTION

Return on investment on deposit. – Interest

2.Instrument for payment of interest on deposit.

SOLUTION

Instrument for payment of interest on deposit. – Interest Warrant

3.An acknowledgement of the fixed deposit accepted by a company.

SOLUTION

An acknowledgement of the fixed deposit accepted by a company. – Deposit Receipt

4.Return of deposits on maturity date.

SOLUTION

Return of deposits on maturity date. – Repayment of Deposit

5.Maximum period of deposits.

SOLUTION

Maximum period of deposits. – 36 months


State whether the following statement is true or false.

1.Fixed deposit is a short term source of finance for the company.

Options
  • True
  • False

2.Fixed Deposit holder is creditor of the company.

Options
  • True
  • False

3.Deposits are invited by the company without issuing statutory advertisement.

Options
  • True
  • False

4.Fixed Deposit holders are entitled to receive dividend.

Options
  • True
  • False

5.A Private Company cannot accept the deposits from the general public.

Options
  • True
  • False

6.Depositors are given voting rights.

Options
  • True
  • False

1.Find the odd one.

Options
  • Dividend
  • Depositor
  • Deposit Receipt

2.Find the odd one.

Options
  • Trust Deed
  • Depository
  • Deposit Receipt

Complete the sentence.

1.Depositors are the ______ of the company.

SOLUTION

Depositors are the creditors of the company.

2.The ______ must be cautious and careful while writing letters to the depositors.

SOLUTION

The secretary must be cautious and careful while writing letters to the depositors.

3.Deposit is a ______ term source of finance of the company.

SOLUTION

Deposit is a short term source of finance of the company.

4.A company can accept deposits for the minimum period of ______ months.

SOLUTION

A company can accept deposits for the minimum period of six months.

5.Depositors are entitled to receive ______ at fixed rate.

SOLUTION

Depositors are entitled to receive interest at fixed rate.


Select the correct option from the bracket.

Group ‘A’Group ‘B’
a) Depositor1) ____________
b) Return on Deposits2) ____________
c) ______________3) Maximum Period of Deposits
d) Minimum Period of Deposits4) ____________

(Interest, Creditor of the company, 36 months, 6 months)

SOLUTION

Group ‘A’Group ‘B’
a) Depositor1) ____________
b) Return on Deposits2) ____________
c) ______________3) Maximum Period of Deposits
d) Minimum Period of Deposits4) ____________

Answer in one sentence.

1.Who is depositor?

SOLUTION

A depositor is a person who subscribes to the deposits of a company.

2.What is the return on deposit?

SOLUTION

A fixed rate of interest is the return on deposit.

3.What is Interest Warrant?

SOLUTION

Interest Warrant is an instrument issued by the company for payment of interest on a deposit.

4.What is renewal of deposit?

SOLUTION

A process whereby the deposit holder continues with the deposit for an additional time period after the completion of the initial time period of investment (deposit) is called as ‘Renewal of Deposit’.

5.Which document is enclosed along with the Renewal Letter?

SOLUTION

A Renewal Deposit Receipt is enclosed along with the Renewal Letter.

6.When will the company return the deposit?

SOLUTION

The company will return the deposit on maturity of the tenure of deposit.

7.What is minimum and maximum period of deposit?

SOLUTION

The minimum period of deposit is 6 months and the maximum period is 36 months.


Correct the underlined word and rewrite the following sentence.

1.Depositors are owners of the company.

SOLUTION

Depositors are creditors of the company.

2.Deposits are the internal source of financing.

SOLUTION

Deposits are the external source of financing.

3.Deposit is a long term source of capital.

SOLUTION

Deposit is a short term source of capital.

4.Depositors are entitled to receive dividend.

SOLUTION

Depositors are entitled to receive interest.


1.Arrange in proper order

  1. Renewal of Deposit
  2. Acceptance of Deposits
  3. Deposit Receipt

SOLUTION

  1. Acceptance of Deposit
  2. Deposit Receipt
  3. Renewal of Deposit

2.Arrange in proper order

  1. Payment of Interest
  2. Deposit Receipt
  3. Acceptance of Deposits

SOLUTION

  1. Acceptance of Deposit
  2. Deposit Receipt
  3. Payment of Interest

Explain the following term/concept.

1.Depositor

SOLUTION

A depositor is a person who subscribes to the deposits of a company. He is a creditor of the company. Depositors get interest as a return on their investment of money in deposits.

2.Deposit

SOLUTION

Deposit is a short term source of finance for the company and it is used to meet the short term working capital requirements of the company. The company cannot accept deposits for a period of less than 6 months or more than 36 months. The company is liable to pay regular interest on the deposits at a fixed rate along with the principal amount on maturity.

3.Interest on Deposit

SOLUTION

The company accepts deposits in order to meet the short-term requirement of the company. A deposit is a borrowed capital. The company is liable to pay a fixed rate of interest on the amount invested in deposits by the depositors. The company pays interest through interest warrant or electronic mode i.e. NEFT, ECS etc.

4.Deposit Receipt

SOLUTION

The company accepts deposits in order to meet the short-term requirement of the company. The Deposit Receipt is proof of receipt of deposit. It is sent to the depositor within 21 days from the date of acceptance of deposits.

5.Renewal of Deposit

SOLUTION

A process whereby the deposit holder continues with the deposit for an additional time period after the completion of the initial time period of investment (deposit) is called as ‘Renewal of Deposit’. The additional period can be similar or different from the original time period. Deposit Renewal Form is sent to depositors at least one month before the maturity date.

6.Repayment of Deposit

SOLUTION

Repayment of deposit refers to returning the money invested by the deposits on completion of tenure of the deposits. On maturity of the tenure of deposits, it is binding on the company to repay the deposit. Default in repayment of deposit results in a levy of penalty.


Answer in brief.

1.What precautions are to be borne in mind by the Secretary, while corresponding with Depositors.

SOLUTION

The company secretary has to correspond with the depositors on various occasions. The secretary has to be careful and cautious while corresponding with depositors. The precautions which are to be borne in mind by the secretary are as follows:

  1. CORRECT INFORMATION (Accuracy):
    Letters written to the depositors should be accurate and precise. All the information provided to them should be correct and factual.
  2. CONSIDERATION (You altitude):
    The letters to the depositors should be written from the depositor’s point of view. It should be written after taking into consideration the requirements of the depositors.
  3. POLITENESS (COURTESY):
    Politeness means the use of courteous language in the letter. Being the creditors, due respect should be given to the depositors in secretarial correspondence. The tone of the letter to depositors must be polite. Rude language should be strictly avoided while corresponding with the depositors.
  4. SECRECY:
    As a confidential officer of the company, the secretary should not disclose any important and confidential information related to the company while corresponding with depositors.
  5. PROMPT RESPONSE:
    The secretary should promptly reply to any queries and complaints of the depositors. There should not be any delay in the correspondence.
  6. IMAGE AND GOODWILL:
    While corresponding with depositors, the secretary should always try to maintain goodwill and create a good image of the company in the mind of depositors.
  7. LEGAL PROVISIONS:
    The secretary should follow all the statutory provisions of the Companies Act, 2013, and any other relevant laws while corresponding with the depositors. The secretary should be cautious and careful while corresponding with depositors on legal matters.
  8. TO-THE-POINT LETTERS (Conciseness):
    The letter to the depositors should be concise i.e. it should be brief, short, and to the point. Any unnecessary and irrelevant information must be avoided.

2.What are the circumstances under which the Secretary makes correspondence with depositors?

SOLUTION

1. The company accepts deposits for a short period of time in order to meet the company’s short term working capital requirements.

2. Depositors are the creditors of the company.

3. The Company Secretary has to correspond with depositors on various occasions.

4. The Secretary has to communicate various decisions of the Board of Directors to the depositors.

5. The following are the few circumstances when the Secretary enters into correspondence with the Depositors:

  1. Thanking depositors for depositing the amount and showing faith in the company.
  2. Intimation about payment of interest through –
    i. Interest Warrant
    ii. Electronic payment of Interest
  3. Letter informing about the renewal of deposits.
  4. Informing depositors about repayment of deposit on maturity

Justify the following statement.

1.The Company Secretary should take certain precautions while corresponding with depositors.

SOLUTION

  1. Depositors are creditors of the company.
  2. The company secretary has to correspond with the depositors on various occasions.
  3. While writing letters, a secretary should provide correct, up-to-date, and factual information to the depositors.
  4. He should be prompt in replying to any queries or complaints of depositors.
  5. He should not give out sensitive and confidential information about the company. He should always strive to maintain a good image of the company.
  6. The secretary should follow the provisions of the Companies Act, 2013, and its latest amendments.
  7. Most importantly, he must use courteous language during all his correspondence.
  8. Thus, the company secretary should take certain precautions while corresponding with depositors.

2.There are certain circumstances when a secretary has to correspond with Depositors.

SOLUTION

  1. Deposits are borrowed capital of a company.
  2. Depositors are the creditors of the company.
  3. The secretary has to communicate the decisions of the management and other information to the depositors by conducting correspondence
  4. The secretary has to correspond with depositors under the following circumstances:
    a. Thanking depositors for depositing the amount and showing faith in the company.
    b. Intimation about payment of interest
    c. Renewal of deposits
    d. Informing depositors about repayment of deposits on maturity.
  5. Thus, there are certain circumstances when a secretary has to correspond with depositors.

1.Draft a letter of thanks to the depositor of a company.

SOLUTION

  1. The letter of thanks is sent to the depositors by the company immediately after receiving the deposits.
  2. It gives detailed information about deposits i.e. Amount of deposit, Date of deposit, Period of deposit, etc.
  3. The Deposit Receipt which is proof of the receipt of the deposit by the company is sent to the depositor along with this letter.
  4. This letter is sent within 21 days from the date of acceptance of deposits.

HULK MOTORS LTD.

Registered office: Plot No. 05, Commercial Towers, P.K. Road,

Mumbai – 400067

CIN: R20020 MH 1000 PLC123456

Website: www.hulkmotors.in

Email: hulk4321@gmail.com

Date: 17th Oct, 2020

Phone: 022 12345678

Fax: 022 – 11112222

Ref. No.: C/2060/20-18

Mr. John Methiw

508, Lokesh Apartments,

AK.D. Road,

Mumbai – 4000089

Sub: Thanking Depositor for Fixed Deposit

Dear Sir,

       We have received your application dated 12th Oct, 2020 for an investment of ₹ 1,00,000 in the fixed deposit of our company, as per terms and conditions stated in the advertisement, for a period of 2 years. We are thankful to you for the initiative and the trust you have shown in depositing a substantial amount in our company.

      The details of deposits accepted are given in the following schedule:

12345
Fixed Deposit Receipt No.Amount of Deposit (₹)Period of Deposit (Years)Rate of interest (%)Bank Details
    Name of the BankBank Account No
12350,000210%HDFC Bank00004567

      The Board of Directors of our company expresses its gratitude for depositing money in our company. We assure you of our best services and thank you for the confidence shown in our company.

      Thanking You,

Yours Faithfully,    

For Hulk Motors Ltd.

 Sign           

Mr. Kamlesh Gaikwad

Company Secretary

Encl: Fixed Deposit Receipt No.123

2.Draft a letter of thanks to the depositor of a company.

SOLUTION

  1. Deposit is a borrowed capital of the company.
  2. Depositors get interest as a return on the money invested by them in the deposits.
  3. When the interest on the deposit becomes due, the secretary sends a letter to the depositor informing him about the payment of the interest.
  4. In this letter, the Company Secretary gives detailed information about payment of interest such as – Amount of deposit, Rate of interest, Gross amount of interest, TDS, Net amount of interest, Interest Warrant No., etc.
  5. The company pays interest either through interest warrant or electronically.

HULK MOTORS LTD.

Registered office: Plot No. 05, Commercial Towers, P.K. Road,

Mumbai – 400067

CIN: R20020 MH 1000 PLC123456

Website: www.hulkmotors.in

Email: hulk4321@gmail.com

Date: 17th Oct, 2020

Phone: 022 12345678

Fax: 022 – 11112222

Ref. No.: C/2060/20-18

Mr. John Methiw

508, Lokesh Apartments,

AK.D. Road,

Mumbai – 4000089

Sub: Payment of Interest on Fixed Deposits

Dear Sir,

        I am instructed by the Board of Directors to inform you that the interest @ 10% on your Fixed Deposit approved by the Board has become due for the year ending 31st March, 2020. We are enclosing herewith ‘Interest Warrant’ No. A-432, dated 12th Oct, 2020 drawn on ICICI Bank, Worli Branch for ₹ 5,000/-.

        Your company has complied with all the provisions relating to the payment of interest on deposits. The details of your Fixed Deposit and interest payable on deposit are given in the following schedule:

1234567
Interest Warrant No.Fixed Deposit Receipt No.Deposit Amount (₹)Rate of interest (%)Gross Amount of InterestTDS @ (10%)Net Amount of Interest Payable (₹)
A-43212350,00010%₹ 5,000/-NIL₹ 5,000/-

       The Interest Warrant is enclosed herewith. Please detach the Interest Warrant along the perforated line.

      Thanking You,

Yours Faithfully,    

For Hulk Motors Ltd.

 Sign           

Mr. Kamlesh Gaikwad

Company Secretary

Encl: Interest Warrant


3.Write a letter to depositor regarding renewal of his deposit.

SOLUTION

HULK MOTORS LTD.

Registered office: Plot No. 05, Commercial Towers, P.K. Road,

Mumbai – 400067

CIN: R20020 MH 1000 PLC123456

Website: www.hulkmotors.in

Email: hulk4321@gmail.com

Date: 17th Oct, 2020

Phone: 022 12345678

Fax: 022 – 11112222

Ref. No.: C/2060/20-18

Mr. John Methiw

508, Lokesh Apartments,

AK.D. Road,

Mumbai – 4000089

Sub: Renewal of Fixed Deposit.

Dear Sir,

We have received your application for renewal of the deposit of ₹ 50,000 for a further period of two years. Along with the application we have also received original Fixed Deposit Receipt (FDR) No. 685, and the same has been placed before the Board for consideration and approval.

      The Board of Directors by passing a resolution at the Board meeting held on 12th Oct 2020 has decided to renew the deposits for a further period of 2 years on the same terms and conditions. A Deposit Receipt No. 342 is enclosed along with this letter.

     Thanking You,

Yours Faithfully,    

For Hulk Motors Ltd.

 Sign           

Mr. Kamlesh Gaikwad

Company Secretary

Encl: Fixed Deposit Receipt No. 342


4.Draft a letter to depositor regarding repayment of his deposit.

SOLUTION

  1. On the maturity of the tenure of the deposits, it is binding on the company to repay the amount of the deposit.
  2. If the company defaults in the re-payment of the deposits, the penalty will be levied.
  3. The letter of repayment of the deposit is to be sent to the depositor when the deposit is to be redeemed.
  4. The letter informs the depositor that the fixed deposit receipt is received by the company.
  5. This letter includes information about the Repayment of Deposit such as – tenure of deposit, Fixed Deposit Receipt No., deposit amount, rate of interest, maturity amount, TDS, net amount, the due date of payment of deposits, etc.

HULK MOTORS LTD.

Registered office: Plot No. 05, Commercial Towers, P.K. Road,

Mumbai – 400067

CIN: R20020 MH 1000 PLC123456

Website: www.hulkmotors.in

Email: hulk4321@gmail.com

Date: 17th Oct, 2020

Phone: 022 12345678

Fax: 022 – 11112222

Ref. No.: C/2060/20-18

Mr. John Methiw

508, Lokesh Apartments,

AK.D. Road,

Mumbai – 4000089

Sub: Repayment of Fixed Deposit

Dear Sir,

        This is to inform you that your Fixed Deposit Receipt A-432 dated 27th Oct, 2018 for ₹ 50,000/- will be due for repayment on 28th Oct, 2020.

        We have received from you the original Deposit Receipt No. 567 duly discharged along with your instruction for repayment. The Board of Directors in the meeting held on 12th Oct, 2020 has passed a resolution for the redemption of the deposits.

       The details of repayment of deposit are as under:

12345678
Tenure of DepositFixed Deposit Receipt No.Deposit Amount (₹)Rate of interest (%)Maturity Amt (₹)TDS (10%)Net Amt (₹)Due Date of Deposit
2 years12350,000₹ 10,00060,000₹ 1,00059,00028th Oct, 2020

Please find enclosed herewith a crossed cheque of ₹ 59000, bearing No. 123456 dated 28th Oct, 2020 drawn on ICICI Bank, Worli Branch, Mumbai – 400 008.

      Thanking You,

Yours Faithfully,    

For Hulk Motors Ltd.

 Sign           

Mr. Kamlesh Gaikwad

Company Secretary

Encl: Crossed Cheque No. 456789


5.Draft a letter to depositor informing him about payment of interest electronically.

SOLUTION

The company can pay interest on the deposits to the depositors electronically through ECS or NEFT.

HULK MOTORS LTD.

Registered office: Plot No. 05, Commercial Towers, P.K. Road,

Mumbai – 400067

CIN: R20020 MH 1000 PLC123456

Website: www.hulkmotors.in

Email: hulk4321@gmail.com

Date: 17th Oct, 2020

Phone: 022 12345678

Fax: 022 – 11112222

Ref. No.: C/2060/20-18

Mr. John Methiw

508, Lokesh Apartments,

AK.D. Road,

Mumbai – 4000089

Sub: Payment of Interest on Fixed Deposit Electronically through ECS or NEFT.

Dear Sir,

        I am instructed by the Board of Directors to convey to you that the Board has passed a resolution in the Board Meeting held on 12th Oct, 2020 to pay interest @ 10% on deposits for the year ending 28th March, 2020.

      Your company has complied with all the provisions relating to the payment of interest on deposits.

      The details of payment of interest payable to you are as follows:

123456
Fixed Deposit Receipt. NoDeposit Amount (₹)Rate of interest (%)Gross Amt. of Interest (₹)TDS (10%)Net Amt. of Interest Payable (₹)
12350,000105000NIL5000

     Interest will be paid by electronic transfer i.e. by crediting the said interest to your bank account, as per details provided by you to the company.

     Thanking You,

Yours Faithfully,    

For Hulk Motors Ltd.

 Sign           

Mr. Kamlesh Gaikwad

Company Secretary


                                            

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