Question

This source of finance is regulated by the Reserve Bank Of India and cannot exceed 25% of share capital and reserves. (i) Identify the source of finance on the basis of above information (ii) Describe any two merits and two demerits of it. ​

Answer 1

Answer:

1. Public deposits of a company cannot exceed 25 % of its share capital and reserves.

2. 1 ) Two merits are:

• No Dilution of Control
• No Charge on Assets:

2) Two demerits are:

• Temporary Finance
• Unsuitable for New Concerns: