Acceptance of Deposits Notes
Ch 5: Acceptance of Deposits
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1. What is a Deposit? (Sec 2(31))

  • A 'deposit' includes any receipt of money by way of deposit or loan or in any other form.
  • However, there is a list of amounts that are NOT considered deposits.

What is NOT a Deposit?

  • Money from Govt. or foreign banks.
  • Loans from any Indian bank or PFI.
  • Inter-corporate deposits (from another company).
  • Share application money (if shares are allotted in 60 days).
  • Money from a director (if they declare it's not from borrowed funds).
  • Amount received against secured or convertible debentures.
Ch 5: Acceptance of Deposits
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2. General Prohibitions (Sec 73)

  • Generally, no company can invite, accept, or renew deposits from the public.
  • Exception: This rule does not apply to:
    • Banking Companies
    • Non-Banking Financial Companies (NBFCs)
    • Housing Finance Companies (HFCs)
  • A company can accept deposits from its members by following specific rules.
Ch 5: Acceptance of Deposits
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3. Accepting Deposits from Members

A company must follow these steps:

  • Pass a resolution in a general meeting.
  • Issue a circular (Form DPT-1) to all members.
  • File the circular with the ROC 30 days before issuing it.
  • Create a Deposit Repayment Reserve Account and deposit at least 20% of deposits maturing in the next financial year by April 30th.
  • Provide security for the deposits or state that they are unsecured.
Ch 5: Acceptance of Deposits
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4. Accepting Deposits from Public

Who can accept? (Sec 76)

  • Only an "Eligible Company" can accept deposits from the public.
  • An Eligible Company is a public company with:
    • Net Worth of at least ₹100 Crore, OR
    • Turnover of at least ₹500 Crore.

Conditions for Eligible Companies

  • Pass a Special Resolution.
  • Obtain a credit rating every year.
  • Create a charge on assets if deposits are secured.
Ch 5: Acceptance of Deposits
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5. Key Rules for All Deposits

  • Tenure: Deposits must be for a minimum of 6 months and a maximum of 36 months.
  • Deposit Receipt: Must be issued within 21 days of receiving the money.
  • Register of Deposits: A company must maintain a register of all its depositors.
  • Return of Deposits: A return (Form DPT-3) must be filed with the ROC by June 30th every year.
  • Penalty for Non-Repayment: If a company fails to repay a matured deposit, it must pay a penal interest of 18% p.a. for the overdue period.
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