Acceptance of Deposits by Companies | Corporate & Other Laws for CA Intermediate PDF Download

 Page 1


                                 
   
 
 
ACCEPTANCE OF DEPOSITS BY COMPANIES  
 
KINDS OF DEPOSIT 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACCEPTANCE OF DEPOSITS FROM 
THE PUBLIC (SECTION 76) 

 Only Eligible company can accept 
deposits from public 

 Eligible Company: Public company 
having  Net worth = 100 crores 
   Or 
   Turnover = 500 crores 

 Pass Special Resolution in general 
meeting 
However, if the proposed deposits from the 
public together with the existing 
borrowings of the company do not 
exceed its net worth (i.e., sum total of 
paid-up share capital and free 
reserves). an eligible company may 
accept deposits by means of an 
ordinary resolution. 

 In order to accept deposits from the 
public, the company has to certify, in 
circular in the form of an advertisement, 
that it has not committed any default in 
the repayment of deposits accepted 
either before or after the 
commencement of this Act or payment 
of interest on such deposits. 

 Further, such company shall obtain the 
credit rating from a recognized credit 
rating agency for information the public 
about such rating at the time of 
invitation of deposits from the public. 
The rating shall be obtained for every 
year during the tenure of deposits 
 
ACCEPTANCE OF DEPOSIT 
FROM MEMBERS (SECTION 73) 

 Private or public company 
can accept deposits from its 
members 

 By passing of a resolution in 
general meeting and subject 
to certain specified conditions.  

 In order to accept deposits 
from members, the company 
has to certify, in circular, that it 
has not committed any default 
in the repayment of deposits 
accepted either before or after 
the commencement of this Act 
or payment of interest on such 
deposits. 
 
Page 2


                                 
   
 
 
ACCEPTANCE OF DEPOSITS BY COMPANIES  
 
KINDS OF DEPOSIT 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACCEPTANCE OF DEPOSITS FROM 
THE PUBLIC (SECTION 76) 

 Only Eligible company can accept 
deposits from public 

 Eligible Company: Public company 
having  Net worth = 100 crores 
   Or 
   Turnover = 500 crores 

 Pass Special Resolution in general 
meeting 
However, if the proposed deposits from the 
public together with the existing 
borrowings of the company do not 
exceed its net worth (i.e., sum total of 
paid-up share capital and free 
reserves). an eligible company may 
accept deposits by means of an 
ordinary resolution. 

 In order to accept deposits from the 
public, the company has to certify, in 
circular in the form of an advertisement, 
that it has not committed any default in 
the repayment of deposits accepted 
either before or after the 
commencement of this Act or payment 
of interest on such deposits. 

 Further, such company shall obtain the 
credit rating from a recognized credit 
rating agency for information the public 
about such rating at the time of 
invitation of deposits from the public. 
The rating shall be obtained for every 
year during the tenure of deposits 
 
ACCEPTANCE OF DEPOSIT 
FROM MEMBERS (SECTION 73) 

 Private or public company 
can accept deposits from its 
members 

 By passing of a resolution in 
general meeting and subject 
to certain specified conditions.  

 In order to accept deposits 
from members, the company 
has to certify, in circular, that it 
has not committed any default 
in the repayment of deposits 
accepted either before or after 
the commencement of this Act 
or payment of interest on such 
deposits. 
 
                                 
TERMS AND CONDITIONS OF ACCEPTANCE OF DEPOSITS BY COMPANIES [RULES] 
Periods of 
Acceptance 
of Deposits 
[Rule 3(1)(a)] 

 No company shall accept or renew any deposit, which is repayable on 
demand; or on notice; or after a period of less than 6 months or more 
than 36 months from the date of acceptance or renewal of such 
deposits, as the case may be.  

 However a company may, for meeting short-term requirements of 
funds, accept or renew short-term deposits for repayment earlier than 
6 months from the date of deposit or renewal; provided that such 
deposits do not exceed 10% of the aggregate of the paid-up share 
capital and free reserves of the company and such deposits are 
not repayable earlier than 3 months from the date of acceptance or 
renewal, as the case may be.  
Ceiling 
limits for 
acceptance 
of Deposits 
[Rule 3(3), 
(4)&(5)]  
 

 For a Company other than an Eligible Company: It may accept or renew 
any deposit from its members, if the amount of such deposits together 
with the amount of other deposits outstanding as on the date of 
acceptance or renewal of such deposits does not exceed 35% of the 
aggregate of the paid-up share capital and free reserves of the 
company.  

 For an Eligible Company :  
      other than a Government Eligible Company, can accept or renew 
deposits, together with existing deposits, subject to the following ceiling  
• Deposits from Members: 10% of the aggregate of paid-up share 
capital and free reserves.  
• Any other Deposits: 25% of the aggregate of paid-up share capital 
and free reserves.  

 A Government Eligible Company can accept or renew deposits, 
together with existing deposits, up to 35% of aggregate of its paid-up 
capital and free reserves.  

 Any private company may accept deposits from its members up to 
100% of its (Paid up share capital and Free reserves) 
Ceiling on 
Rate of 
Interest and 
Brokerage 
[Rule 3(6)] : 
No company shall accept/renew deposits at a rate of interest exceeding 
the maximum rate of interest prescribed by RBI that the NBFCs can pay 
on their public deposits.  
Similarly, no company shall pay brokerage at a rate exceeding the 
maximum rate of brokerage prescribed by RBI that the NBFCs can pay on 
their public deposits.  
Credit 
Rating 
[Rule 3(8)] 

 Every eligible company shall obtain, at least once in a year, credit 
rating for deposits accepted by it and a copy of the rating shall be sent 
to the Registrar of Companies along with the return of deposits in Form 
DPT-3. 

 The credit rating shall not be below the minimum investment grade 
rating or other specified credit rating for fixed deposits, from any one of 
the approved credit rating agencies as specified for Non- Banking 
Financial Companies in the Non-Banking Financial Companies 
Acceptance of Public Deposits (Reserve Bank) Directions, 1998, 
issued by the Reserve Bank of India, as amended from time to time. 
Creation of 
Security  
[Rule 6] :  

 Every company inviting secured deposits shall, within 30 days from the 
date of acceptance, provide for security by way of a charge on its 
assets, by way of either mortgage or hypothecation only.  

 It may be noted that the company shall ensure that the total value of 
the security either by way of deposit insurance or by way of charge or 
by both on company's assets shall not be Jess than the amount of 
deposits accepted and the interest payable thereon.  
Page 3


                                 
   
 
 
ACCEPTANCE OF DEPOSITS BY COMPANIES  
 
KINDS OF DEPOSIT 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACCEPTANCE OF DEPOSITS FROM 
THE PUBLIC (SECTION 76) 

 Only Eligible company can accept 
deposits from public 

 Eligible Company: Public company 
having  Net worth = 100 crores 
   Or 
   Turnover = 500 crores 

 Pass Special Resolution in general 
meeting 
However, if the proposed deposits from the 
public together with the existing 
borrowings of the company do not 
exceed its net worth (i.e., sum total of 
paid-up share capital and free 
reserves). an eligible company may 
accept deposits by means of an 
ordinary resolution. 

 In order to accept deposits from the 
public, the company has to certify, in 
circular in the form of an advertisement, 
that it has not committed any default in 
the repayment of deposits accepted 
either before or after the 
commencement of this Act or payment 
of interest on such deposits. 

 Further, such company shall obtain the 
credit rating from a recognized credit 
rating agency for information the public 
about such rating at the time of 
invitation of deposits from the public. 
The rating shall be obtained for every 
year during the tenure of deposits 
 
ACCEPTANCE OF DEPOSIT 
FROM MEMBERS (SECTION 73) 

 Private or public company 
can accept deposits from its 
members 

 By passing of a resolution in 
general meeting and subject 
to certain specified conditions.  

 In order to accept deposits 
from members, the company 
has to certify, in circular, that it 
has not committed any default 
in the repayment of deposits 
accepted either before or after 
the commencement of this Act 
or payment of interest on such 
deposits. 
 
                                 
TERMS AND CONDITIONS OF ACCEPTANCE OF DEPOSITS BY COMPANIES [RULES] 
Periods of 
Acceptance 
of Deposits 
[Rule 3(1)(a)] 

 No company shall accept or renew any deposit, which is repayable on 
demand; or on notice; or after a period of less than 6 months or more 
than 36 months from the date of acceptance or renewal of such 
deposits, as the case may be.  

 However a company may, for meeting short-term requirements of 
funds, accept or renew short-term deposits for repayment earlier than 
6 months from the date of deposit or renewal; provided that such 
deposits do not exceed 10% of the aggregate of the paid-up share 
capital and free reserves of the company and such deposits are 
not repayable earlier than 3 months from the date of acceptance or 
renewal, as the case may be.  
Ceiling 
limits for 
acceptance 
of Deposits 
[Rule 3(3), 
(4)&(5)]  
 

 For a Company other than an Eligible Company: It may accept or renew 
any deposit from its members, if the amount of such deposits together 
with the amount of other deposits outstanding as on the date of 
acceptance or renewal of such deposits does not exceed 35% of the 
aggregate of the paid-up share capital and free reserves of the 
company.  

 For an Eligible Company :  
      other than a Government Eligible Company, can accept or renew 
deposits, together with existing deposits, subject to the following ceiling  
• Deposits from Members: 10% of the aggregate of paid-up share 
capital and free reserves.  
• Any other Deposits: 25% of the aggregate of paid-up share capital 
and free reserves.  

 A Government Eligible Company can accept or renew deposits, 
together with existing deposits, up to 35% of aggregate of its paid-up 
capital and free reserves.  

 Any private company may accept deposits from its members up to 
100% of its (Paid up share capital and Free reserves) 
Ceiling on 
Rate of 
Interest and 
Brokerage 
[Rule 3(6)] : 
No company shall accept/renew deposits at a rate of interest exceeding 
the maximum rate of interest prescribed by RBI that the NBFCs can pay 
on their public deposits.  
Similarly, no company shall pay brokerage at a rate exceeding the 
maximum rate of brokerage prescribed by RBI that the NBFCs can pay on 
their public deposits.  
Credit 
Rating 
[Rule 3(8)] 

 Every eligible company shall obtain, at least once in a year, credit 
rating for deposits accepted by it and a copy of the rating shall be sent 
to the Registrar of Companies along with the return of deposits in Form 
DPT-3. 

 The credit rating shall not be below the minimum investment grade 
rating or other specified credit rating for fixed deposits, from any one of 
the approved credit rating agencies as specified for Non- Banking 
Financial Companies in the Non-Banking Financial Companies 
Acceptance of Public Deposits (Reserve Bank) Directions, 1998, 
issued by the Reserve Bank of India, as amended from time to time. 
Creation of 
Security  
[Rule 6] :  

 Every company inviting secured deposits shall, within 30 days from the 
date of acceptance, provide for security by way of a charge on its 
assets, by way of either mortgage or hypothecation only.  

 It may be noted that the company shall ensure that the total value of 
the security either by way of deposit insurance or by way of charge or 
by both on company's assets shall not be Jess than the amount of 
deposits accepted and the interest payable thereon.  
                                 
Appointment 
of Trustee 
for 
Depositors, 
etc. [Rules 
7] : 

 Every company, inviting secured deposits, shall appoint one or mere 
trustees for depositors for creating security for the deposits.  

 The company shall execute a deposit trust deed in Form DPT-2 at least 
7 days before issuing the circular or circular in the form of 
advertisement.  

 The duties and functions of depositor trustee shall generally be --- 
(i)  To protect the interest of holders of depositors (including creation of 
securities within the stipulated time); and  
(ii) To redress the grievances of holders of depositors effectively.  

 Disqualification: No person including a company that is in the business 
of providing trusteeship services shall be appointed as a trustee for the 
depositors, if the proposed trustee—  
a) is a director, key managerial personnel or any other officer or an 
employee of the company or of its holding, subsidiary or 
associate company or a depositor in the company;  
b) is indebted to the company, or its subsidiary or its holding or 
associate company or a subsidiary of such holding company; 
c) has any material pecuniary relationship with the company;  
d) has entered into any guarantee arrangement in respect of 
principal debts secured by the deposits or interest thereon;  
e) is related to any person specified above. 

 No trustee for depositors shall be removed from office after the issue of 
circular or advertisement and before the expiry of his term except with 
the consent of all the directors present at a meeting of the board. 
Register of 
Deposits  
[Rule 14] : 

 Every company accepting deposits shall keep, at its registered office, 
one or more registers in which there shall be entered, separately in 
case of each depositor, the fo1lowing particulars, namely:- 
(i) Name, address and PAN of the depositor/s; 
(ii) Particulars of guardian, in case of a minor;  
(iii) Particulars of the nominee;  
(iv) Deposit receipt number;  
(v) Date and the amount of each deposit;  
(vi) Duration of the deposit and the date on which each deposit is 
repayable;  
(vii) Rate of interest or such deposits to be payable to the depositor;  
(viii) Due date for payment of interest;  
(ix) Mandate and instructions for payment of interest and for non- 
  deduction of tax at source, if any;  
(x) Date or dates on which the payment of interest shall be made;  
(xi) Details of deposit insurance including extent of deposit insurance;  
(xii) Particulars of security or charge created for repayment of deposits;  
(xiii) Any other relevant particulars; 

 The entries specified above shall be made within 7 days from the date 
of issuance of the receipt duly authenticated by a director or secretary 
of the company or by any other officer authorised by the Board for this 
purpose.  

 The register or registers must be preserved in good order for a period 
of not less than 8 calendar years from the financial year in which the 
Page 4


                                 
   
 
 
ACCEPTANCE OF DEPOSITS BY COMPANIES  
 
KINDS OF DEPOSIT 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACCEPTANCE OF DEPOSITS FROM 
THE PUBLIC (SECTION 76) 

 Only Eligible company can accept 
deposits from public 

 Eligible Company: Public company 
having  Net worth = 100 crores 
   Or 
   Turnover = 500 crores 

 Pass Special Resolution in general 
meeting 
However, if the proposed deposits from the 
public together with the existing 
borrowings of the company do not 
exceed its net worth (i.e., sum total of 
paid-up share capital and free 
reserves). an eligible company may 
accept deposits by means of an 
ordinary resolution. 

 In order to accept deposits from the 
public, the company has to certify, in 
circular in the form of an advertisement, 
that it has not committed any default in 
the repayment of deposits accepted 
either before or after the 
commencement of this Act or payment 
of interest on such deposits. 

 Further, such company shall obtain the 
credit rating from a recognized credit 
rating agency for information the public 
about such rating at the time of 
invitation of deposits from the public. 
The rating shall be obtained for every 
year during the tenure of deposits 
 
ACCEPTANCE OF DEPOSIT 
FROM MEMBERS (SECTION 73) 

 Private or public company 
can accept deposits from its 
members 

 By passing of a resolution in 
general meeting and subject 
to certain specified conditions.  

 In order to accept deposits 
from members, the company 
has to certify, in circular, that it 
has not committed any default 
in the repayment of deposits 
accepted either before or after 
the commencement of this Act 
or payment of interest on such 
deposits. 
 
                                 
TERMS AND CONDITIONS OF ACCEPTANCE OF DEPOSITS BY COMPANIES [RULES] 
Periods of 
Acceptance 
of Deposits 
[Rule 3(1)(a)] 

 No company shall accept or renew any deposit, which is repayable on 
demand; or on notice; or after a period of less than 6 months or more 
than 36 months from the date of acceptance or renewal of such 
deposits, as the case may be.  

 However a company may, for meeting short-term requirements of 
funds, accept or renew short-term deposits for repayment earlier than 
6 months from the date of deposit or renewal; provided that such 
deposits do not exceed 10% of the aggregate of the paid-up share 
capital and free reserves of the company and such deposits are 
not repayable earlier than 3 months from the date of acceptance or 
renewal, as the case may be.  
Ceiling 
limits for 
acceptance 
of Deposits 
[Rule 3(3), 
(4)&(5)]  
 

 For a Company other than an Eligible Company: It may accept or renew 
any deposit from its members, if the amount of such deposits together 
with the amount of other deposits outstanding as on the date of 
acceptance or renewal of such deposits does not exceed 35% of the 
aggregate of the paid-up share capital and free reserves of the 
company.  

 For an Eligible Company :  
      other than a Government Eligible Company, can accept or renew 
deposits, together with existing deposits, subject to the following ceiling  
• Deposits from Members: 10% of the aggregate of paid-up share 
capital and free reserves.  
• Any other Deposits: 25% of the aggregate of paid-up share capital 
and free reserves.  

 A Government Eligible Company can accept or renew deposits, 
together with existing deposits, up to 35% of aggregate of its paid-up 
capital and free reserves.  

 Any private company may accept deposits from its members up to 
100% of its (Paid up share capital and Free reserves) 
Ceiling on 
Rate of 
Interest and 
Brokerage 
[Rule 3(6)] : 
No company shall accept/renew deposits at a rate of interest exceeding 
the maximum rate of interest prescribed by RBI that the NBFCs can pay 
on their public deposits.  
Similarly, no company shall pay brokerage at a rate exceeding the 
maximum rate of brokerage prescribed by RBI that the NBFCs can pay on 
their public deposits.  
Credit 
Rating 
[Rule 3(8)] 

 Every eligible company shall obtain, at least once in a year, credit 
rating for deposits accepted by it and a copy of the rating shall be sent 
to the Registrar of Companies along with the return of deposits in Form 
DPT-3. 

 The credit rating shall not be below the minimum investment grade 
rating or other specified credit rating for fixed deposits, from any one of 
the approved credit rating agencies as specified for Non- Banking 
Financial Companies in the Non-Banking Financial Companies 
Acceptance of Public Deposits (Reserve Bank) Directions, 1998, 
issued by the Reserve Bank of India, as amended from time to time. 
Creation of 
Security  
[Rule 6] :  

 Every company inviting secured deposits shall, within 30 days from the 
date of acceptance, provide for security by way of a charge on its 
assets, by way of either mortgage or hypothecation only.  

 It may be noted that the company shall ensure that the total value of 
the security either by way of deposit insurance or by way of charge or 
by both on company's assets shall not be Jess than the amount of 
deposits accepted and the interest payable thereon.  
                                 
Appointment 
of Trustee 
for 
Depositors, 
etc. [Rules 
7] : 

 Every company, inviting secured deposits, shall appoint one or mere 
trustees for depositors for creating security for the deposits.  

 The company shall execute a deposit trust deed in Form DPT-2 at least 
7 days before issuing the circular or circular in the form of 
advertisement.  

 The duties and functions of depositor trustee shall generally be --- 
(i)  To protect the interest of holders of depositors (including creation of 
securities within the stipulated time); and  
(ii) To redress the grievances of holders of depositors effectively.  

 Disqualification: No person including a company that is in the business 
of providing trusteeship services shall be appointed as a trustee for the 
depositors, if the proposed trustee—  
a) is a director, key managerial personnel or any other officer or an 
employee of the company or of its holding, subsidiary or 
associate company or a depositor in the company;  
b) is indebted to the company, or its subsidiary or its holding or 
associate company or a subsidiary of such holding company; 
c) has any material pecuniary relationship with the company;  
d) has entered into any guarantee arrangement in respect of 
principal debts secured by the deposits or interest thereon;  
e) is related to any person specified above. 

 No trustee for depositors shall be removed from office after the issue of 
circular or advertisement and before the expiry of his term except with 
the consent of all the directors present at a meeting of the board. 
Register of 
Deposits  
[Rule 14] : 

 Every company accepting deposits shall keep, at its registered office, 
one or more registers in which there shall be entered, separately in 
case of each depositor, the fo1lowing particulars, namely:- 
(i) Name, address and PAN of the depositor/s; 
(ii) Particulars of guardian, in case of a minor;  
(iii) Particulars of the nominee;  
(iv) Deposit receipt number;  
(v) Date and the amount of each deposit;  
(vi) Duration of the deposit and the date on which each deposit is 
repayable;  
(vii) Rate of interest or such deposits to be payable to the depositor;  
(viii) Due date for payment of interest;  
(ix) Mandate and instructions for payment of interest and for non- 
  deduction of tax at source, if any;  
(x) Date or dates on which the payment of interest shall be made;  
(xi) Details of deposit insurance including extent of deposit insurance;  
(xii) Particulars of security or charge created for repayment of deposits;  
(xiii) Any other relevant particulars; 

 The entries specified above shall be made within 7 days from the date 
of issuance of the receipt duly authenticated by a director or secretary 
of the company or by any other officer authorised by the Board for this 
purpose.  

 The register or registers must be preserved in good order for a period 
of not less than 8 calendar years from the financial year in which the 
                                 
latest entry is made in the register.  
Return of 
Deposits  
[Rule 16] : 
Every company shall file a return of deposits, in Form DPT-3, with the 
Registrar of Companies on or before 30th June of every year. This return 
shall contain information as on 31st March and shall be duly certified by 
the Auditors of the Company.  
Disclosures 
in the 
financial 
statement 
[Rule 16A]: 

 Every company, other than a private company, shall disclose in its 
financial statement, by way of notes, about the money received from 
the director. 

 Every private company shall disclose in its financial statement, by way 
of notes, about the money received from the directors, or relatives of 
directors. 
Penal rate of 
interest  
[Rule 17]: 
A penal rate of interest of 18% per annum shall be paid for the overdue 
period, in case of public deposits, whether secured or unsecured, matured 
and claimed but remaining unpaid.  
 
• REPAYMENT OF DEPOSITS, ETC, ACCEPTED BEFORE COMMENCEMENT OF 
THIS ACT [SECTION 74]  
According to section 74 of the Companies Act, 2013,  
(i)   Where in respect of any deposit accepted by a company before the 
commencement of this Act, the amount of such deposit or part thereof or any 
interest due thereon remains unpaid on such commencement or becomes due at 
any time thereafter, the company shall— 
a)   File, within a period of 3 months from such commencement or from the 
date on which such payments, are due, with the Registrar a statement of all 
the deposits accepted by the company and sums remaining unpaid on such 
amount with the interest payable thereon along with the arrangements 
made for such repayment, notwithstanding anything contained in any other 
law for the time being in force or under the terms and conditions subject to 
which the deposit was accepted or any scheme framed under any law; and  
b)   Repay within three years from such commencement or on or before 
expiry of the period for which the deposits were accepted, whichever 
is earlier. 
Provided that renewal of any such deposits shall be done in accordance with the 
provisions of Chapter V and the rules made there under (As amended as per 
Notification dated 3
rd
 Jan, 2018). 
(ii) The Tribunal may on an application made by the company, after considering the 
financial condition of the company, the amount of deposit or part thereof and the 
interest payable thereon and such other matters, allow further time as considered 
reasonable to the company to repay the deposit.  
 
(iii) Punishment: If a company fails to repay the deposit or part thereof or any 
interest thereon within the time specified or such further time as may be allowed 
by the Tribunal, the company shall, in addition to the payment of the amount of 
deposit or part thereof and the interest due, be punishable with fine which shall 
not be less than one crore rupees but which may extend to ten crore rupees and 
every officer of the company who is in default shall be punishable with 
imprisonment which may extend to seven years or with fine which shall not be 
less than twenty-five lakh rupees but which may extend to two crore rupees, or 
with both. 
 
Page 5


                                 
   
 
 
ACCEPTANCE OF DEPOSITS BY COMPANIES  
 
KINDS OF DEPOSIT 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACCEPTANCE OF DEPOSITS FROM 
THE PUBLIC (SECTION 76) 

 Only Eligible company can accept 
deposits from public 

 Eligible Company: Public company 
having  Net worth = 100 crores 
   Or 
   Turnover = 500 crores 

 Pass Special Resolution in general 
meeting 
However, if the proposed deposits from the 
public together with the existing 
borrowings of the company do not 
exceed its net worth (i.e., sum total of 
paid-up share capital and free 
reserves). an eligible company may 
accept deposits by means of an 
ordinary resolution. 

 In order to accept deposits from the 
public, the company has to certify, in 
circular in the form of an advertisement, 
that it has not committed any default in 
the repayment of deposits accepted 
either before or after the 
commencement of this Act or payment 
of interest on such deposits. 

 Further, such company shall obtain the 
credit rating from a recognized credit 
rating agency for information the public 
about such rating at the time of 
invitation of deposits from the public. 
The rating shall be obtained for every 
year during the tenure of deposits 
 
ACCEPTANCE OF DEPOSIT 
FROM MEMBERS (SECTION 73) 

 Private or public company 
can accept deposits from its 
members 

 By passing of a resolution in 
general meeting and subject 
to certain specified conditions.  

 In order to accept deposits 
from members, the company 
has to certify, in circular, that it 
has not committed any default 
in the repayment of deposits 
accepted either before or after 
the commencement of this Act 
or payment of interest on such 
deposits. 
 
                                 
TERMS AND CONDITIONS OF ACCEPTANCE OF DEPOSITS BY COMPANIES [RULES] 
Periods of 
Acceptance 
of Deposits 
[Rule 3(1)(a)] 

 No company shall accept or renew any deposit, which is repayable on 
demand; or on notice; or after a period of less than 6 months or more 
than 36 months from the date of acceptance or renewal of such 
deposits, as the case may be.  

 However a company may, for meeting short-term requirements of 
funds, accept or renew short-term deposits for repayment earlier than 
6 months from the date of deposit or renewal; provided that such 
deposits do not exceed 10% of the aggregate of the paid-up share 
capital and free reserves of the company and such deposits are 
not repayable earlier than 3 months from the date of acceptance or 
renewal, as the case may be.  
Ceiling 
limits for 
acceptance 
of Deposits 
[Rule 3(3), 
(4)&(5)]  
 

 For a Company other than an Eligible Company: It may accept or renew 
any deposit from its members, if the amount of such deposits together 
with the amount of other deposits outstanding as on the date of 
acceptance or renewal of such deposits does not exceed 35% of the 
aggregate of the paid-up share capital and free reserves of the 
company.  

 For an Eligible Company :  
      other than a Government Eligible Company, can accept or renew 
deposits, together with existing deposits, subject to the following ceiling  
• Deposits from Members: 10% of the aggregate of paid-up share 
capital and free reserves.  
• Any other Deposits: 25% of the aggregate of paid-up share capital 
and free reserves.  

 A Government Eligible Company can accept or renew deposits, 
together with existing deposits, up to 35% of aggregate of its paid-up 
capital and free reserves.  

 Any private company may accept deposits from its members up to 
100% of its (Paid up share capital and Free reserves) 
Ceiling on 
Rate of 
Interest and 
Brokerage 
[Rule 3(6)] : 
No company shall accept/renew deposits at a rate of interest exceeding 
the maximum rate of interest prescribed by RBI that the NBFCs can pay 
on their public deposits.  
Similarly, no company shall pay brokerage at a rate exceeding the 
maximum rate of brokerage prescribed by RBI that the NBFCs can pay on 
their public deposits.  
Credit 
Rating 
[Rule 3(8)] 

 Every eligible company shall obtain, at least once in a year, credit 
rating for deposits accepted by it and a copy of the rating shall be sent 
to the Registrar of Companies along with the return of deposits in Form 
DPT-3. 

 The credit rating shall not be below the minimum investment grade 
rating or other specified credit rating for fixed deposits, from any one of 
the approved credit rating agencies as specified for Non- Banking 
Financial Companies in the Non-Banking Financial Companies 
Acceptance of Public Deposits (Reserve Bank) Directions, 1998, 
issued by the Reserve Bank of India, as amended from time to time. 
Creation of 
Security  
[Rule 6] :  

 Every company inviting secured deposits shall, within 30 days from the 
date of acceptance, provide for security by way of a charge on its 
assets, by way of either mortgage or hypothecation only.  

 It may be noted that the company shall ensure that the total value of 
the security either by way of deposit insurance or by way of charge or 
by both on company's assets shall not be Jess than the amount of 
deposits accepted and the interest payable thereon.  
                                 
Appointment 
of Trustee 
for 
Depositors, 
etc. [Rules 
7] : 

 Every company, inviting secured deposits, shall appoint one or mere 
trustees for depositors for creating security for the deposits.  

 The company shall execute a deposit trust deed in Form DPT-2 at least 
7 days before issuing the circular or circular in the form of 
advertisement.  

 The duties and functions of depositor trustee shall generally be --- 
(i)  To protect the interest of holders of depositors (including creation of 
securities within the stipulated time); and  
(ii) To redress the grievances of holders of depositors effectively.  

 Disqualification: No person including a company that is in the business 
of providing trusteeship services shall be appointed as a trustee for the 
depositors, if the proposed trustee—  
a) is a director, key managerial personnel or any other officer or an 
employee of the company or of its holding, subsidiary or 
associate company or a depositor in the company;  
b) is indebted to the company, or its subsidiary or its holding or 
associate company or a subsidiary of such holding company; 
c) has any material pecuniary relationship with the company;  
d) has entered into any guarantee arrangement in respect of 
principal debts secured by the deposits or interest thereon;  
e) is related to any person specified above. 

 No trustee for depositors shall be removed from office after the issue of 
circular or advertisement and before the expiry of his term except with 
the consent of all the directors present at a meeting of the board. 
Register of 
Deposits  
[Rule 14] : 

 Every company accepting deposits shall keep, at its registered office, 
one or more registers in which there shall be entered, separately in 
case of each depositor, the fo1lowing particulars, namely:- 
(i) Name, address and PAN of the depositor/s; 
(ii) Particulars of guardian, in case of a minor;  
(iii) Particulars of the nominee;  
(iv) Deposit receipt number;  
(v) Date and the amount of each deposit;  
(vi) Duration of the deposit and the date on which each deposit is 
repayable;  
(vii) Rate of interest or such deposits to be payable to the depositor;  
(viii) Due date for payment of interest;  
(ix) Mandate and instructions for payment of interest and for non- 
  deduction of tax at source, if any;  
(x) Date or dates on which the payment of interest shall be made;  
(xi) Details of deposit insurance including extent of deposit insurance;  
(xii) Particulars of security or charge created for repayment of deposits;  
(xiii) Any other relevant particulars; 

 The entries specified above shall be made within 7 days from the date 
of issuance of the receipt duly authenticated by a director or secretary 
of the company or by any other officer authorised by the Board for this 
purpose.  

 The register or registers must be preserved in good order for a period 
of not less than 8 calendar years from the financial year in which the 
                                 
latest entry is made in the register.  
Return of 
Deposits  
[Rule 16] : 
Every company shall file a return of deposits, in Form DPT-3, with the 
Registrar of Companies on or before 30th June of every year. This return 
shall contain information as on 31st March and shall be duly certified by 
the Auditors of the Company.  
Disclosures 
in the 
financial 
statement 
[Rule 16A]: 

 Every company, other than a private company, shall disclose in its 
financial statement, by way of notes, about the money received from 
the director. 

 Every private company shall disclose in its financial statement, by way 
of notes, about the money received from the directors, or relatives of 
directors. 
Penal rate of 
interest  
[Rule 17]: 
A penal rate of interest of 18% per annum shall be paid for the overdue 
period, in case of public deposits, whether secured or unsecured, matured 
and claimed but remaining unpaid.  
 
• REPAYMENT OF DEPOSITS, ETC, ACCEPTED BEFORE COMMENCEMENT OF 
THIS ACT [SECTION 74]  
According to section 74 of the Companies Act, 2013,  
(i)   Where in respect of any deposit accepted by a company before the 
commencement of this Act, the amount of such deposit or part thereof or any 
interest due thereon remains unpaid on such commencement or becomes due at 
any time thereafter, the company shall— 
a)   File, within a period of 3 months from such commencement or from the 
date on which such payments, are due, with the Registrar a statement of all 
the deposits accepted by the company and sums remaining unpaid on such 
amount with the interest payable thereon along with the arrangements 
made for such repayment, notwithstanding anything contained in any other 
law for the time being in force or under the terms and conditions subject to 
which the deposit was accepted or any scheme framed under any law; and  
b)   Repay within three years from such commencement or on or before 
expiry of the period for which the deposits were accepted, whichever 
is earlier. 
Provided that renewal of any such deposits shall be done in accordance with the 
provisions of Chapter V and the rules made there under (As amended as per 
Notification dated 3
rd
 Jan, 2018). 
(ii) The Tribunal may on an application made by the company, after considering the 
financial condition of the company, the amount of deposit or part thereof and the 
interest payable thereon and such other matters, allow further time as considered 
reasonable to the company to repay the deposit.  
 
(iii) Punishment: If a company fails to repay the deposit or part thereof or any 
interest thereon within the time specified or such further time as may be allowed 
by the Tribunal, the company shall, in addition to the payment of the amount of 
deposit or part thereof and the interest due, be punishable with fine which shall 
not be less than one crore rupees but which may extend to ten crore rupees and 
every officer of the company who is in default shall be punishable with 
imprisonment which may extend to seven years or with fine which shall not be 
less than twenty-five lakh rupees but which may extend to two crore rupees, or 
with both. 
 
                                 
• DAMAGES FOR FRAUD [SECTION 75] 

 Section 75 provides that in case the company fails to pay the deposit or any 
interest thereon within 3 years from the commencement of the Act or from the 
date on which such payments becomes due, whichever is earlier, or within such 
time periods as allowed by the NCLT and it is proved that the deposits had been 
accepted with intent to defraud the depositors,  
Every officer who was responsible for acceptance of such deposits shall be liable 
without prejudice to the provisions contained under section 74 and liability for fraud 
under section 447, be personally responsible, without any limitation of liability for all 
losses or damages incurred by the depositors.  

 For failure to repay the deposits, action may also be taken by any person, group 
of persons or any association of persons who had incurred any loss as a result 
such failure. 
 
• PUNISHMENT FOR CONTRAVENTION OF SECTION 73 OR SECTION 76 
[SECTION 76A]   (As amended as per Notification dated 3
rd
 Jan, 2018). 

 Where a company accepts or invites or allows or causes any other person to 
accept or invite on its behalf any deposit in contravention of the manner or the 
conditions prescribed under section 73 or section 76 or rules made there under 
or if a company fails to repay the deposit or part thereof or any interest due 
thereon within the time specified under section 73 or section 76 or rules made 
there under or such further time as may be allowed by the Tribunal under section 
73: 
(a)   The company shall, in addition to the payment of the amount of deposit or 
part thereof and the interest due, be punishable with fine minimum ` ` ` ` 1 
Crore  
  or twice the amount of deposit accepted by the company, whichever is 
lower up to ` ` ` `10 Crore  and  
(b)   Every officer of the company who is in default shall be punishable with 
imprisonment which may extend to 7 years AND with minimum fine of 
` ` ` ` 25 lacs and a maximum fine of ` ` ` ` 2 crore.  

 Provided that if it is proved that the officer of the company who is in default, has 
contravened such provisions knowingly or wilfully with the intention to deceive the 
company or its shareholders or depositors or creditors or tax authorities, he shall 
be liable for action under section 447.