Deposits are repaid on maturity. - Vidyadip

Question

Deposits are repaid on maturity.

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Answer

Deposit is a short-term source of finance of the company and it is used in order to satisfy the short-term working capital needs of the company.
The company cannot accept deposits for a period less than 6 months or more than 36 months,
The company is liable to pay regular interest on the deposits at a fixed rate along with the principal amount on maturity.
On maturity of tenure of deposits, it is binding on the company to repay the deposit.
Default in repayment of deposit results in levy of penalty.
The letter for repayment of the deposit is to be sent to the depositor when the deposit is to be redeemed.
Thus, it is rightly justified that deposits are repaid on maturity.

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