In October 2020, Tarun deposited ₹100000 for a term of three years with Fun Ltd., an unlisted company. Tarun seeks your advice on the following: Suppose, if during February 2021, the Reserve Bank of India (RBI) declared

Provisions of the Companies (Acceptance of Deposits) Rules, 2014: As per Rule 3 of the Companies (Acceptance of Deposits) Rules, 2014, no company referred to in Section 73(2) of the Companies Act, 2013 or any eligible company shall invite or accept or renew any deposit in any form, carrying a rate of interest or pay brokerage thereon at a rate exceeding the maximum rate of interest or brokerage prescribed by the Reserve Bank of India for acceptance of deposits by non-banking financial companies. Further, Rule 15 of the Companies (Acceptance of Deposits) Rules, 2014 also provides that nothing contained in Rule 15 (relating to deduction of 1% interest) shall apply to the repayment of any deposit before the expiry of the period for which such deposit was accepted by the company, if such repayment is made solely for the purpose of complying with the provisions of Rule 3 of the Companies (Acceptance of Deposits) Rules, 2014. Application to the given case: Fun Ltd. has violated the maximum rate of brokerage fixed by the RBI, which makes the acceptance of the deposit invalid under Rule 3. Tarun's withdrawal is a consequence of this invalidity, aiming to comply with the rules. Conclusion: Hence, as Fun Ltd. has violated the maximum rate of brokerage fixed by the RBI and thus the acceptance of the deposit becomes invalid, the repayment of the deposit in this case shall be treated as being done solely for the purpose of complying with Rule 3 of the Companies (Acceptance of Deposits) Rules, 2014. Therefore, Fun Ltd. has to return the deposit **without any deduction in the interest rate or amount**.