Chapter 8 – Correspondence with Depositors
Q.1 A) Select the correct answer from the options given below and rewrite the statements.
1) Depositors are _____ of a company.
a) Members
b) Creditors
c) Debtors
2) Depositors provide _____ Capital to the company.
a) Short Term
b) Long Term
c) Medium term
3) A Company cannot accept deposit for more than _____ months.
a) 24
b) 36
c) 45
4) A company cannot accept deposit for less than _____ months.
a) 6
b) 3
c) 5
5) Deposits are _____ loans of the company.
a) fixed
b) short term
c) long term
6) Public Deposits are accepted to meet the requirement of _____ Capital.
a) fixed
b) working
c) owned
7) _____ has the power to invite deposits from Public.
a) Shareholders
b) Auditors
c) Board of Directors
8) Rate of interest on deposits is _____ .
a) fixed
b) fluctuating
c) moderate
9) The return or income for the investment of money on deposits is called _____ .
a) Dividend
b) Interest
c) Discount
Q.1 B) Match the pairs.
Answers.
a. 4) Creditors
b. 1) Fixed
c. 5) Evidence of deposit
Q.1 C) Write a word or a term or a phrase which can substitute each of the following statements.
1) Return on investment in deposit.
Ans: Interest
2) Instrument for payment of interest on deposit.
Ans: Interest Warrant
3) An acknowledgment of the fixed deposit accepted b a company.
Ans: Deposit Receipt
4) Return of deposits on maturity date.
Ans: Repayment of Deposit
5) Maximum period of deposits.
Ans: 36 Months
Q.1 D) State whether the following statements are true or false.
1) Fixed deposit is a short-term source of finance for the company.
Ans: True
2) Fixed Deposit holder is creditor of the company.
Ans: Ture
3) Deposits are invited by the company without issuing statutory advertisement.
Ans: False
4) Fixed Deposit holders are entitled to receive dividend.
Ans: False
5) A Private Company cannot accept the deposits from the general public.
Ans: True
6) Depositors are given voting rights.
Ans: False
Q.1 E) Find the odd one.
Dividend, Depositor, Deposit Receipt
Trust Deed, Depository, Deposit Receipt
Q.1 F) Complete the sentences.
1) Depositors are the creditors of the company.
2) The secretary must be cautious and careful while writing letters to the depositors.
3) Deposit is a short term source of finance of the company.
4) A company can accept deposits for a minimum period of 6 months.
5) Depositors are entitled to receive interest at fixed rate.
Q.1 G) Select the correct option from the bracket.
Q.1 H) Answer in one sentence.
1) Who is depositor?
Answer: Depositors are the creditors of the company who get interest on his deposits regularly at a fixed rate.
2) What is the return on deposit?
Answer: Depositors get interest as a return on their investment of money in deposits.
3) What is Interest Warrant?
Answer: It is a cheque given by a company or an organization in payment of interest on deposit , it is called interest warrant.
4) What is renewal of deposit?
Answer: 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?
Answer: Fixed deposit receipt is enclosed along with the Renewal Letter.
6) When will the company return the deposit?
Answer: On maturity of deposit the company return the deposit.
7) What is minimum and maximum period of deposit?
Answer: The minimum period of deposit is 6 months and the maximum period is 36 months.
Q.1 I) Correct the underlined word/s and rewrite the following sentences.
1) Depositors are owners of the company.
Answer: Creditors.
2) Deposits are the internal source of financing.
Answer: External.
3) Deposit is a long term source of capital.
Answer: Short
4) Depositors are entitled to receive dividend.
Answer: Interest
Q.1 J) Arrange in proper order
1)
a) Renewal of Deposit
b) Acceptance of Deposits
c) Deposit Receipt
Answer: (b) Acceptance of Deposits (c) Deposit Receipt (a) Renewal of Deposit
2)
a) Payment of Interest
b) Deposit Receipt
c) Acceptance of Deposits
Answer: (c) Acceptance of Deposits (b) Deposit Receipt (a) Payment of Interest
Q.2 Explain the following terms/concepts.
1) Depositor
Answer: a) Depositors are the creditors of the company.
b) Depositors get interest on his deposits regularly at fixed rate.
c) They provide short term funds to the company to meet their working capital requirement.
2) Deposit
Answer: a) Deposit is a short term source of finance of the company and it is used in order to satisfy short term working capital needs of the company.
b) Company cannot accept deposits for a period less than 6 months or more than 36 months.
c) 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
Answer: a) A fixed rate of interest is agreed upon and is paid on maturity in case of deposits.
b) Payment of interest is a fixed liability of the company. The company pays interest through Interest Warrant or Electronically.
c) It must be paid by company irrespective of the fact, whether the company makes profit or not.
4) Deposit Receipt
Answer: a) The Deposit Receipt which is proof of receipt of deposit is sent to the depositor along with this letter within 21 days from the date of acceptance of deposits.
b) Deposit receipt gives detailed information regarding the deposits i.e. Amount of deposit, Date of deposit, Period of deposit, Rate of Interest, Maturity date etc.
5) Renewal of Deposit
Answer: a) 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’.
b) The additional period can be similar or different from the original time period.
6) Repayment of Deposit
Answer: a) On maturity of tenure of deposits, it is binding on the company to repay the deposit.
b) Default in repayment of deposit results in levy of penalty.
c) The letter for repayment of deposit is to be sent to the depositor, when the deposit is to be redeemed.
Q.1 C) Write a word or a term or a phrase which can substitute each of the following statements.
1) Return on investment in deposit.
Ans: Interest
2) Instrument for payment of interest on deposit.
Ans: Interest Warrant
3) An acknowledgment of the fixed deposit accepted b a company.
Ans: Deposit Receipt
4) Return of deposits on maturity date.
Ans: Repayment of Deposit
5) Maximum period of deposits.
Ans: 36 Months
Q.1 D) State whether the following statements are true or false.
1) Fixed deposit is a short-term source of finance for the company.
Ans: True
2) Fixed Deposit holder is creditor of the company.
Ans: Ture
3) Deposits are invited by the company without issuing statutory advertisement.
Ans: False
4) Fixed Deposit holders are entitled to receive dividend.
Ans: False
5) A Private Company cannot accept the deposits from the general public.
Ans: True
6) Depositors are given voting rights.
Ans: False
Q.1 E) Find the odd one.
Dividend, Depositor, Deposit Receipt
Trust Deed, Depository, Deposit Receipt
Q.1 F) Complete the sentences.
1) Depositors are the creditors of the company.
2) The secretary must be cautious and careful while writing letters to the depositors.
3) Deposit is a short term source of finance of the company.
4) A company can accept deposits for a minimum period of 6 months.
5) Depositors are entitled to receive interest at fixed rate.
Q.1 G) Select the correct option from the bracket.
Q.1 H) Answer in one sentence.
1) Who is the depositor?
Answer: Depositors are the creditors of the company who get interest on his deposits regularly at a fixed rate.
2) What is the return on deposit?
Answer: Depositors get interest as a return on their investment of money in deposits.
3) What is an Interest Warrant?
Answer: It is a cheque given by a company or an organization in payment of interest on deposit , it is called interest warrant.
4) What is renewal of deposit?
Answer: 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 ‘Renewal of Deposit’.
5) Which document is enclosed along with the Renewal Letter?
Answer: Fixed deposit receipt is enclosed along with the Renewal Letter.
6) When will the company return the deposit?
Answer: On maturity of deposit the company returns the deposit.
7) What is the minimum and maximum period of deposit?
Answer: The minimum period of deposit is 6 months and the maximum period is 36 months.
Q.1 I) Correct the underlined word/s and rewrite the following sentences.
1) Depositors are owners of the company.
Answer: Creditors.
2) Deposits are the internal source of financing.
Answer: External.
3) Deposit is a long term source of capital.
Answer: Short
4) Depositors are entitled to receive dividend.
Answer: Interest
Q.1 J) Arrange in proper order
1)
a) Renewal of Deposit
b) Acceptance of Deposits
c) Deposit Receipt
Answer: (b) Acceptance of Deposits (c) Deposit Receipt (a) Renewal of Deposit
2)
a) Payment of Interest
b) Deposit Receipt
c) Acceptance of Deposits
Answer: (c) Acceptance of Deposits (b) Deposit Receipt (a) Payment of Interest
Q.2 Explain the following terms/concepts.
1) Depositor
Answer: a) Depositors are the creditors of the company.
b) Depositors get interest on his deposits regularly at fixed rate.
c) They provide short term funds to the company to meet their working capital requirement.
2) Deposit
Answer: a) Deposit is a short term source of finance of the company and it is used in order to satisfy short term working capital needs of the company.
b) Company cannot accept deposits for a period less than 6 months or more than 36 months.
c) 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
Answer: a) A fixed rate of interest is agreed upon and is paid on maturity in case of deposits.
b) Payment of interest is a fixed liability of the company. The company pays interest through Interest Warrant or Electronically.
c) It must be paid by company irrespective of the fact, whether the company makes profit or not.
4) Deposit Receipt
Answer: a) The Deposit Receipt which is proof of receipt of deposit is sent to the depositor along with this letter within 21 days from the date of acceptance of deposits.
b) Deposit receipt gives detailed information regarding the deposits i.e. Amount of deposit, Date of deposit, Period of deposit, Rate of Interest, Maturity date etc.
5) Renewal of Deposit
Answer: a) 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’.
b) The additional period can be similar or different from the original time period.
6) Repayment of Deposit
Answer: a) On maturity of tenure of deposits, it is binding on the company to repay the deposit.
b) Default in repayment of deposit results in levy of penalty.
c) The letter for repayment of deposit is to be sent to the depositor, when the deposit is to be redeemed.
Q.3 Answer in brief.
1) What precautions are to be borne in mind by the Secretary, while corresponding with Depositors?
Answer: The following precautions are to be kept in mind by the Secretary while corresponding with the depositors.
1) Legal Provisions: The Secretary should ensure that provisions relating to invitation, acceptance, renewal and repayment of deposits are duly complied with by the company, while corresponding with depositors. Secretary should observe the legal provisions.
2) Courtesy: Polite replies are essential while writing letters to the depositors. Rude words should be strictly avoided.
3) Prompt Response: The Secretary should give prompt replies to the queries and complaints of the depositors without any delay.
4) Accuracy: The letter written to the depositors should be accurate and precise. Factual and correct information should be provided to them.
5) Image and Goodwill: While writing letters, the Secretary has to maintain the goodwill of the company.
6) You Attitude: Letter should be written from depositors point of view, after taking into consideration the requirements of the depositors.
7) Conciseness: The letters must be concise i.e. short, brief and to the point. Unnecessary and irrelevant information should be avoided.
8) Maximum Secrecy: It is necessary to maintain maximum secrecy as regards secretarial correspondence with depositors.
2) What are the circumstances under which the Secretary makes correspondence with depositors?
Answer: The Secretary has to communicate various decisions of the Board of Directors to the depositors.
The following are the few circumstances under which the Secretary enters into correspondence
with the depositors.
Thanking depositors for depositing amount and showing faith in the company.
Intimation about payment of interest through –
a) Interest Warrant
b) Electronic payment of InterestLetter informing about renewal of deposits.
Informing depositors about repayment of deposit on maturity.
Q.4 Justify the following statements.
1) The Company Secretary should take certain precautions while corresponding with Depositors.
Answer: The following precautions are to be taken by the Secretary while corresponding with Debenture holder.
1) Legal Provisions: The Secretary should ensure that provisions relating to invitation, acceptance, renewal and repayment of deposits are duly complied with by the company, while corresponding with depositors. The Secretary should observe the legal provisions.
2) Courtesy: Polite replies are essential while writing letters to the depositors. Rude words should be strictly avoided.
3) Prompt Response: The Secretary should give prompt replies to the queries and complaints of the depositors without any delay.
4) Accuracy: The letter written to the depositors should be accurate and precise. Factual and correct information should be provided to them.
2) There are certain circumstances when a Secretary has to correspond with Depositors.
Answer: The following are the few circumstances under which the Secretary enters into correspondence
with the depositors.
Thanking depositors for depositing the amount and showing faith in the company.
Intimation about payment of interest through –
a) Interest Warrant
b) Electronic payment of InterestLetter informing about renewal of deposits.
Informing depositors about repayment of deposit on maturity.
Q.5 Answer the following
1) Draft a letter of thanks to the depositor of a company.
Answer: For the answer refer to page no. 118 of Textbook.
2) Draft a letter to the depositor informing him about payment of interest through Interest Warrant.
Answer: For the answer refer to page no. 119 of Textbook.
3) Write a letter to the depositor regarding renewal of his deposit.
Answer: For the answer refer to page no. 121 of Textbook.
4) Draft a letter to the depositor regarding repayment of his deposit.
Answer: For the answer refer to page no. 122 of Textbook.
5) Draft a letter to the depositor informing him about payment of interest electronically.
Answer: For the answer refer to page no. 120 of Textbook.
