This is one of those areas where the law doesn’t give a straight black-and-white answer.
On one hand, the Companies Act rules clearly talk about a 10-year limit—but only in the context of secured debentures. Unsecured CCDs? Not really addressed there.
Then come the Deposit Rules:
– CCDs are typically expected to be converted within 10 years to stay outside deposit classification.
– But at the same time, money received from foreign body corporates is anyway not considered a deposit.
So now you’ve got two different lenses:
– One based on the nature of the instrument,
– Another based on the type of investor.
And since neither rule says it overrides the other, it opens up a bit of a grey area in interpretation.
Add FEMA to the mix:
– CCDs are treated as capital instruments
– And interestingly, no specific tenure is prescribed there
All of this makes CCD structuring less about ticking boxes and more about understanding how different regulations interact with each other.
The takeaway?
It’s not just about what the rule says individually – but how multiple rules align (or don’t) in practice.