Overview on Acceptance of Deposits Under Companies Act, 2013

Section 73-76 read with Companies (Acceptance of Deposit) Rules, 2014

Deposit – includes any receipt of money by way of deposit or loan or in any other form, by a company.

Depositor –

  1. Any member who has made a deposit with the Company.
  2. Any person who has made a deposit with the Company under Section 76.  (only few eligible companies are allowed to accept public deposits).

What does not constitute a Deposit –

  1. Amount received from Central Government or State Government or where guarantee is provided by Central Government or State Government on any loan obtained by the Company.
  2. Amount received from Foreign Govt., Banks, FI, IFC, ADB, etc., subject to FEMA.
  3. Any amount received from Banking Company or from SBI or its subsidiaries.
  4. Any amount received as loan from Public Financial Institutions, Insurance Co, Banks etc.,
  5. Any amount raised through issue of Commercial Paper in consonance with RBI guidelines.
  6. Amount received by a company from any other company
  7. Amount received for subscription of securities, Share application money or calls in advance.
  8. Any amount received from director (provided that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others).
  9. Any amount raised by the issue of secured bonds or debentures
  10. Any amount received from an employee of the company not exceeding his annual salary as a security under contract of employment.
  11. Any non-interest bearing amount received or held in trust;
  12. Advance received for supply of goods
  13. Advance consideration for transfer of property in an agreement.
  14. Security deposit for performance of contract.
  15. Loan bought in by promoters on stipulation laid by the lending Banks or FI
  16. Amount accepted by Nidhi Company.

Interesting inferences

  1. Any amount received from the Members and Directors relatives are deposits and will attract the provisions of this chapter.
  2. After the receipt of Share application money if the Company does not refund or allot the share application money within the time specified in Section 42 (within 15 days from the expiry of 60 days), then it is considered as deposit.
  3. Any amount received from the parties other than mentioned above shall constitute a deposit and will attract the provisions of this chapter.

The Companies to which this Chapter is not applicable:

  1. Banking Company
  2. NBFC Company registered with RBI. (As on date there are many Company which are registered as NBFC with Registrar of Companies but not registered with RBI. Thus for those Company these provisions are applicable).
  3. Housing Finance Company registered with National Housing Bank under NHB act, 1987.

Who can accept deposits and from whom?

  1. A Public Company can accept deposits from any person (eligible company), if it has
    • Net worth of Rs. 100 Crore or more [or]
    • Turnover of Rs. 500 Crore or more
  2. Other than the eligible Companies, all other companies can accept deposits from its members, subject to the fulfilment of the terms and conditions as specified in sub-section 2 of Section 73. .

Tenure of Deposit

  1. Deposit shall be accepted or renewed for a period
    • Minimum 6 months
    • Maximum 36 months

    If the Company wants to extend the Maximum time limit for deposits, it needs to renew the existing deposits.

  2. A company may accept or renew deposits for less than 6 months for its short term purposes, if it satisfies the following conditions:
    • Such deposits shall not exceed 10% of Paid up capital + free reserves of the Company.
    • Such deposits shall be repaid only after minimum 3 months.

Threshold limits for acceptance or renewal of Deposits

  1. For eligible Company, it cannot accept or renew deposits, if –
    • It proposes to raise deposits from members and that proposed deposits including existing deposits accepted from members are more than 10% of the paid up capital and free reserves.
    • It proposes to raise deposits from other persons (not being specifically to members) and that proposed deposits including existing deposits (excluding deposits not accepted from members) are more than 25% paid up capital and free reserves.
  2. For Government eligible Company, it cannot accept or renew deposit when that proposed deposits including existing deposits are more than 35% paid up capital and free reserves.
  3. Thus, in total an eligible Company can raise deposits up to 35% of the paid up capital + free reserves.
  4. The reason for limiting the threshold limit for accepting deposits from member to 10% is because, if the Company wants funds, it can issue share capital to the members instead of deposits.
  5. For Company which is not eligible Company it cannot accept or renew deposit when that proposed deposits including existing deposits are more than 25% paid up capital and free reserves.

Rate of Interest

  1. Minimum – Nil rate.
  2. Maximum – Rate specified by RBI to NBFC for accepting Deposits.

Procedure to raise deposits:

  1. Board resolution for accepting deposits and approval for preparing the circular in this regard.
  2. Obtain Credit Rating for the Company.
  3. Obtain insurance before 30 days of issuing circular or advertisement for acceptance or renewal.
  4. In case of Secured deposits
    • Appoint trustees in this regard, a consent shall be taken by the person being appointed to act as trustee.
    • The name of the trustee shall be mentioned in the Circular.
    • Execute a Deposit trust deed in Form DPT – 2 before 7 days of issuing circular.
    • Create charge on assets and file Form CHG. 9 with ROC within such creation.
  5. Approving the circular (format of Circular in Form DPT – 1) to be issued for accepting deposit in Board meeting and if necessary, call for General Meeting.
  6. In case of eligible Company General meeting shall be held for passing
    • Special resolution, if the proposed deposits to be accepted along with all the borrowings of the Company are more than paid up capital and free reserves.
    • In all the other cases Ordinary resolution would suffice.
  7. In case of Company not being eligible Company, it has to hold a General meeting and pass a special resolution, if the proposed deposits to be accepted along with all the borrowings of the Company are more than paid up capital and free reserves.
  8. After passing of Special resolution, the company shall file Form MGT 14 within 30 days of passing the resolution with RoC.
  9. File the Copy of Circular with RoC before 30 days of issue of Circular.
  10. Issue circular inviting deposits in the name of the Board of Directors.
  11. The Company shall publish the Circular advertisement in an English Newspaper in English Language and a Vernacular Newspaper in Vernacular Language having wide circulation at the registered office of the Company
  12. Eligible Company shall upload the Circular on the Website.
  13. Deposit receipt to be issued within 21 days of receipt of money or realisation of cheque or date of renewal.
  14. Deposit holders can be joint holders and can nominate any person on their death to be such holder.
  15. Every year, on or before 30th April, Company shall create a Deposit repayment reserve with a Schedule Bank having fund equal to 15% of deposits to be mature in the financial year and next financial year.
  16. Every Company shall file a return of Deposits in DPT-3 on or before 30th June till the company has deposits with RoC.

Procedure for Companies which already accepted deposits:

  1. File within a period of 3 months from commencement of this act Form DPT – 4 with RoC.
  2. Shall repay all the deposits within
    • one year from the commencement of this act i.e., by 31st March, 2015 or
    • on the date on which deposits are becoming due, whichever is earlier. Which mean all the deposits should be repaid by 31st March, 2015 even if they are not maturing or else a penalty of Rs. 1 Crore. Solution for this is provided, the Company can approach Tribunal for extension of the repayment period..
    • If the Company renew existing deposits it shall follow the provisions of new act.


  1. Providing insurance is mandatory for Company accepting deposits.
  2. Company shall enter into contract with insurance agency before 30 days of issue of circular advertisement.
  3. In default the amount of deposit shall be paid by the Insurance agency.
    • If the amount due along with interest is till Rs.20,000/-. It shall be repaid in full.
    • If the amount due along with interest is more than Rs. 20,000/-. It shall be repaid to an extant of Rs. 20,000/- and the rest shall be due to be paid by the Company.


  1. The Company accepting secured deposits shall mention that the deposits are secured in all the circulars and advertisements.
  2. The amount so secured shall not be less than the amount of deposit and interest thereon, which is not been insured under the insurance cover.
  3. Security cannot be created on intangible assets.
  4. Market value of the assets to be valued by the register valuer.
  5. The Security shall be created in the favour of Trustee.
  6. Trustee cannot be
    • Director or KMP or Officer or Employee of the
      1. Company
      2. Holding Company
      3. Subsidiary Company
      4. Associate Company
    • Indebted to the Company’s mentioned above
    • any material pecuniary relationship with the company
    • is a related party.
  7. Trustee cannot be removed before his expiry of the term until and unless his approval is given by the consent of all the directors.
  8. Duties of Trustee
    • Ensure that the charge created and insurance taken are sufficient for repayment of deposits
    • Satisfy that circular does not have any misleading statement.
    • Ensure that Company does not breach the terms of trust deed
    • Take steps to call meeting of deposit holders whenever required.
    • Supervise the implementation of terms of deed
    • do such acts as are necessary in the event the security becomes enforceable
    • carry out activities to protect the interest of deposit holders.

Meetings of Deposit Holders

  1. shall be called on requisition of 1/10th of depositor in value.
  2. On happening of an event which affects the interest of deposit holders or default of terms of deed.

Premature Payment

  1. Payment can be done only after passing of 6 months of such deposit.
  2. Interest rate shall be cut by one percent if premature payment is done.


  1. For Companies which already accepted Deposits:
    • Company
      1. Minimum – Rs. 1 Crore
      2. Maximum – Rs. 10 Crore
    • Officers
      1. Imprisonment up to 7 years [or]
      2. Penalty of minimum Rs. 25 lakh and maximum Rs. 2 Crore [or]
      3. Both imprisonment and penalty
  2. For Companies which are going to accept new Deposits or renew existing deposits:
    • Maximum – Rs. 5000/- and
    • In case of Continuing default then maximum fine of Rs. 500/- every day on Company and every officer
    • In case of Fraud
      1. Imprisonment of minimum 6 months and maximum 10yrs.
      2. Penalty of minimum the amount liable and maximum of 3 times the amount.


Disclaimer: The entire contents of this document have been developed on the basis of relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors and the company expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.

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