Banking News

Banks can register a charge on their own if the borrower company fails to register


Yes, lender bank or Financial Institution (FI) can also file application form for registration of charge with the Registrar of Companies. However, it is the responsibility of the company to register the each charge against its assets. If the borrower company fails to file form for registration of charge with ROC, the lender bank or financial institution in whose favour charge is created can file application for registration of charge. In such cases the lender has to give 14 days’ notice to the company to register the charge. If company fails to file form for registration or does not give sufficient reason why it can’t file application for registration charge with ROC, the lender can submit the application for registration of charge or modification of charge. The lender who files the charge himself is entitled to recover amount of fee paid to ROC from the company.

Punishment for non-registration of charge

If any company contravenes any provision of Chapter VI of the Company act 2013 u/s 77 to 87 such company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees. Besides, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.

Related Articles: (Category Loans and advances)

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  • Difference between first charge and second charge
  • Meaning of pari passu Charge
  • Facility of ‘Condonation of delay in registration of charge’ under companies Act 2013
  • Meaning of fixed charge, floating charge, and crystallization of charge
  • Meaning and effects of registration of charge under Companies act 2013

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