## CARO 2020 – Clause (iii): Loans, Investments, Guarantees, and Security
This clause covers situations where the company itself gives loans, advances, guarantees, or security to other entities.
> Exception for sub-clause (a) and (e): Does not apply to companies whose principal business is to give loans (e.g., NBFCs, banks).
### Sub-Clauses at a Glance
| Sub-clause | What to Report |
|---|---|
| (a) | Whether the company has given loans, guarantees, or security to any entity. Report aggregate amounts separately for: (i) Subsidiaries/JVs/Associates and (ii) Other parties |
| (b) | Whether terms and conditions are not prejudicial to the interest of the company |
| (c) | Whether repayment of principal and interest is regular |
| (d) | If overdue > 90 days: Whether steps for recovery have been taken |
| (e) | Whether loans/advances due during the year were renewed, extended, or fresh loans granted to settle overdue amounts → Report % of such amounts to total loans/advances (NA where principal business is giving loans) |
| (f) | Whether loans/advances granted are repayable on demand or without specifying a repayment period → Report aggregate amount and % of such loans attributable to promoters and related parties |
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## CARO 2020 – Clause (iv): Compliance with Sections 185 & 186
Whether the company has complied with:
- Section 185 – Restrictions on loans to directors and their relatives / entities in which they are interested
- Section 186 – Limits and procedures for loans, investments, guarantees, and security by companies
If there is non-compliance, the auditor must report the nature of the contravention.