b) Maintenance of Net Owned Funds and Principal Business Criteria:
As per the Reserve Bank of India's Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021, the Company is expected to maintain minimum Net Owned Funds of Rs. 20 crores as on 31st March 2023 to carry on its business of housing finance and also to satisfy the Principal Business Criteria. There have been various communications between the management and the Reserve Bank of India (RBI), wherein the RBI has asked the management to satisfy the Net Owned Funds requirements and also submit a road map for fulfilling the Principal Business Criteria. In this connection, the management has submitted a detailed action plan for revival of the Company to the RBI, and has also responded to various queries raised by the RBI relating to the plan. The management had submitted a detailed action plan for revival of the Company to the RBI. Yet RBI vide letter no CO.DoR.RG.No. S3544/23-27-014/2023-24 dated 22.09.2023 cancelled the NHB licence w.e.f 21.09.2023 and the Management surrendered the original Certificate of Registration (CoR) to RBI, Chennai Regional Office on 27.09.2023. Further the Board of Directors of the company had given in-principle approval for winding up of the company under section 271 of the Companies Act 2013 subject to the Shareholders and other Regulatory approvals. Accordingly, the financial statements have been prepared on a going concern concept.
c) The Company continues to receive support from its promoter, Indian Bank. The company has suspended making fresh lending since the year 2000 and is focusing on recovery of housing loans as per the terms of the agreement entered with the borrowers and other loans which are under litigation. The Company was notified as a 'financial institution' under the SARFAESI Act in 2006 which is helping the company to speed up the recovery process.
d) The only business activity of the company is housing finance and hence no segment reporting has been done.
e) The unabsorbed depreciation and carry forward losses eligible for set-off against future taxable income have not been considered for deferred tax asset due to lack of probability that there will be future taxable profit. Hence the deferred tax assets are not created as a prudent measure.
g) The Term Loans from Indian Bank include interest accumulated thereon and outstanding as of 31.03.2017, the entire due of Rs. 129 crores has been maintained in the books of accounts as at the balance sheet date.
h) Amounts received under disputed SARFAESI actions to the tune of Rs.25.00 lakhs are kept in bank deposits. As the matters are sub judice and the relevant cases are pending with the Hon'ble Madras High Court, these have not been adjusted against the loan outstanding while arriving at the provisioning. The surplus recovered over and above the outstanding dues, consequent to sale of property under SARFASI, is retained under “the Amounts pending appropriation with receivable accounts”.
I) Contingent Liabilities -(PY: NIL)
j) Defined Contribution Plans:
Contribution to Provident Fund Rs. 17,339/- (PY: Rs. 20,638/-) is made to the Regional Provident Fund Commissioner and is recognized as an expense. The liability is confined to the contribution made and no further obligation to pay any additional sums.
k) The Company has repaid all the deposit accepted from public except to the extent of Rs.6,33,090/-, which represent the deposits matured but withheld as the Central Bureau of Investigation Anti-Corruption Branch, Shastri Bhavan, Chennai has given directions to not release the amount still the disposal of the pending cases. The Company has parked this amount in fixed deposits with bank.
l) The details of financial assets - loan receivables and pending litigations
• Out of Rs.2.76crores (3cases) dues from ICD, suit has been filed for Rs.2.69crores (2cases)
• Out of Rs.6.71 crores (1 case) dues from Project loans, suit has been filed for Rs.6.71 crores (1case)
• Out of Rs.0.42crores(30cases) dues from individual Loans suit has been filed for Rs.0.39 crores(24 cases)
m) Managing Director of the company is on deputation from Indian Bank and is drawing remuneration from Indbank Merchant Banking Services Ltd as President cum WTD of that company. Hence no remuneration has been paid by the company.
n) Disclosures as per directions “Housing Finance Companies - Corporate Governance as per the Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021” are attached till Sep 2023 quarter as the License of HFC has been cancelled in Sep 2023.
o) Interest due on interest tax refunds for the 5 assessment years 1993-94, 1994-95, 1997-98,1998-99 and 2000-01 have been recognized as income in the earlier years amounting to Rs.237.88 lakhs based on the internal workings / calculations done by the management in consultation with tax consultants. under presumption of the correctness of such calculation as per the provisions of the relevant Act / Rules made there under even though further communications have not been received. However, the company has filed necessary application/appeals/representations before the Income Tax Department for the same. Further, an amount of Rs.2.79 lakhs has been shown as TDS refund receivable even though no credits have been granted due to the fact that the TDS certificates have either not been filed or not appropriate. However, the Company is in continuous effort for doing the necessary procedural compliance to get the refunds.
p) Additional Regulatory Information:
(I) The Company does not own any Immovable properties or investment properties.
(ii) The Company has not revalued its Property, Plant and Equipment or intangible assets during the year.
(iii) The company has not granted any loans or advances in the nature of loans to promoters, Directors, KMPs and related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, either repayable on demand or without specifying any terms or period of repayment.
(iv) The Company does not have any Capital-Work-in Progress (CWIP).
(v) The Company does not have any Intangible Assets under Development.
(vi) There have been no proceedings initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
(vii) The Company does not have any borrowings from banks or financial institutions on the basis of security of current assets.
(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
(ix) The company has not had any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
(xiii) There has been no Scheme of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.
(xiv) Utilization of Borrowed funds and share premium:
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security, or the like on behalf of the Ultimate Beneficiaries.
(xv) There have been no transactions not recorded in the books of account which have been surrendered or disclosed as income during the year. There has also not been any previously unrecorded income or related assets.Also, no tax assessments under the Income Tax Act, 1961 (43 of 1961) have been received during the year.
(xvi) The Company is not covered under the provisions of Section 135 of the Companies Act, 2013.
(xvii) The Company has neither traded nor invested in Crypto currency or Virtual Currency during the financial year.
r) The figures in this Balance Sheet and Statement of Profit and Loss have been rounded off to the nearest hundreds.
a. For determining the amount of unsecured advances, the rights, licenses, authorisations, etc., charged to the HFCs as collateral in respect of projects (including infrastructure projects) financed by them, should not be reckoned as tangible security. Hence such advances shall be reckoned as unsecured.
b. HFCs should also disclose the total amount of advances for which intangible securities such as charge over the rights, licenses, authority, etc. has been taken as also the estimated value of such intangible collateral. The disclosure may be made under a separate head in NTA. This would differentiate such loans from other entirely unsecured loans.
As part of the directors' report or as an addition thereto, a Management Discussion and Analysis report should form part of the Annual Report to the shareholders. This Management Discussion & Analysis should include discussion on the following matters within the limits set by the company's competitive position:
a. Industry structure and developments.
b. Opportunities and Threats.
c. Segment-wise or product-wise performance.
d. Outlook.
e. Risks and concerns.
f. Internal control systems and their adequacy.
g. Discussion on financial performance with respect to
operations.___
h. Material developments in Human Resources /
Industrial Relations front, including number of people
employed.___
4.8. Net Profit or Loss for the period, prior period items and changes in accounting policies_
Since the format of the profit and loss account of HFCs does not specifically provide for disclosure of the impact of prior period items on the current year's profit and loss, such disclosures, wherever warranted, may be made in the NTA.
4.9. Revenue Recognition
An enterprise should also disclose the circumstances in which revenue recognition has been postponed pending the resolution of significant uncertainties.
4.10. Consolidated Financial Statements (CFS)
HFCs may be guided by applicable Accounting Standards in this regard. A parent company, presenting the CFS, should consolidate the financial statements of all subsidiaries - domestic as well as foreign. The reasons for not consolidating a subsidiary should be disclosed in the CFS. The responsibility of determining whether a particular entity should be included or not for consolidation would be that of the Management of the parent entity. In case, its Statutory Auditors are of the opinion that an entity, which ought to have been consolidated, has been omitted, they should incorporate their comments in this regard in the "Auditors Report".
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