Select Your Location
Whenever a company gives any loan, guarantee or security in favor of any other company or a person, then it is termed as inter-corporate loans. Under the Companies Act, 2013, inter-corporate loan in India plays a vital role in the growth of industries. There is a continuous flow of funds for the group and other companies who are in the need of funds.
Keeping in view, the continuous industrialization in India, the corporation may require more funds. Hence, you may need the help of the inter-corporate loan.
In this blog, we will enrich your knowledge about the Inter-corporation loan.
Table of Contents
The inter-corporate loan is a loan made by one unit of a corporation to another unit of the same corporation. The term Inter-corporate loan refers to a loan in which both the lender and borrower are divisions of the same corporation.
Generally, it is necessary to record the inter-corporate loan in the financial statements of individual business units.
There are various objectives of the inter-corporate loan. Inter-corporate loans are loans made from one business unit of a company to another. This is usually for the following reasons and objectives:
The inter-corporate loan is extremely useful for the following reasons.
According to the Companies Act, 2013, there are certain limits on inter-corporate loan. All the companies have following restrictions on the maximum amount of the inter-corporate loan.
These are following restrictions that you must keep in mind while making arrangement for an inter-corporate loan.
The rate of interest applicable to inter-corporate loans will be as follows:
Section 186(4) of the Companies Act, 2013, provides that the where a company made some inter-corporate loans, then that company must disclose the following details to the members in the financial statement
The companies must keep in mind the following requirement before taking inter-corporate loans:
Section 186 of the Companies Act, 2013 does not apply to the following loans given by
Following is the procedure which must be kept in mind while providing inter-corporate loans:
To run any business one of the important resource required is money. Source of funding for companies are share capital, loans etc. Loans are the major source of funding for most of the companies. Nowadays, the inter-corporate loan is one of the best sources of funding amongst the companies. Inter-corporate loan satisfies all the need and necessity of a capital source of a company. A company only after getting consent and approval of the Board as well as shareholders entitles to provide an inter-corporate loans to another company or body corporate.
Read our article:Inter Corporate Loans and Investments According to Section 186 of the Companies Act 2013
Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.
In the recent past, India has seen burgeoning demand for internet and smartphones. The rapid ri...
The Securities and Exchange Board of India (SEBI), the capital markets regulator, has recommend...
The objective of the enactment of the Prevention of Money-laundering Act, 2002, i.e. PMLA (the...
Tax planning is a continuing effort and a management strategy for ensuring the minimization of...
On 18th May 2023, the Securities Exchange Board of India (SEBI) released a Consultation Paper o...
Infrastructure and real estate have been regarded as India's "sunshine sector" since the turn o...
On 22nd May 2023, the Central Board of Direct Taxes (CBDT) issued a new circular under secti...
Anyone can have different sources of income. With globalization and the opening up of economies...
The Reserve Bank of India (RBI) is crucial in regulating NBFC, including branch openings and cl...
In India, Non-Banking Financial Companies are subject to certain restrictions from taking publi...
Are you human?: 9 + 8 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
The idea to commence or operate a Private Limited Company seems incredibly fascinating. Although it majorly depends...
30 Oct, 2017
Jersey is a British Protectorate. It is considered to be effectively self-sufficient for investors in terms of low...
04 Oct, 2018
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!