This statement is true.
Reasons:
Meaning: -The depositor may renew the deposit on completion of the term of deposit. The term 'Renew' implies, 'to acquire again'. Accordingly, the renewal of deposit means acceptance of the deposits by the company for further period.
Thus, the renewal of deposit refers to issuing new deposit receipt in cancellation receipt for old deposit on maturity of old deposit on repayment. The depositor has to submit the application in writing to renew the deposit. He has to also give a declaration to the effect that the amount is not being deposited out of the funds acquired by him by borrowing or accepting deposits from any other person.
Renewal of deposit must need the following procedures to be completed.
1. Board Resolution: -If the company intends to renew deposits instead of refunding it. The resolution in the Board Meeting in this regard is to be passed.
2. Approval from Depositors: -The secretary has to prepare printed application forms for Renewal of Deposits and the same forms are to be sent to all depositors at least one month before the maturity date.
3. Renewal Receipts: -After receiving the application form for renewal, the secretary has to prepare renewal receipts and is to be sent to the depositors.
4. Entries in register of Depositors: -The secretary has to make the entries of renewal of deposit in the Register of Depositors.
