Understanding Deposits Rules for Companies

Deposits
Version 4.0
CA. Pramod Jain_
B. Com (H), FCA, FCS, FCMA, LL.B. DISA, MIMA, Insolvency Professional
This document would assist the reader in
understanding the requirements for accepting /
renewing DEPOSITS under Companies Act, 2013.
This document incorporates all major amendments to
Deposit Rules and Companies (Amendment) Act
2017.
24th
October 2018

CA. PRAMOD JAIN
B. COM (H), FCA, FCS,
FCMA, LL.B, DISA, MIMA, Insolvency Professional
Company Law - Deposits 2
CONTENTS
S. No Content Page No.
1 Statutory Summary 3
2 Amounts not treated as Deposits 3-6
3 Deposits from Members 6-13
4 Deposits from Directors 13
5 Deposits from Relatives of Directors 14
6
Deposits from Directors who are also
Shareholders
15
7 Deposits by Private Companies 15-16
8 Deposits by Public Companies 16
9 Deposits from Public 17-18
10 Premature surrender of Deposits 18
11 Return of Deposits 18
12 Existing Deposits 19-20
13 Penal Interest 20
14 Punishment 20-21

CA. PRAMOD JAIN
DEPOSITS
Pursuant to various amendments in Companies (Acceptance of Deposit) Rules 2014, Companies
(Amendment) Act, 2017 and exemption notification for private companies and its further
amendment, it was thought prudent to amend the original / amended document to make it
relevant as on date. Hence, this document is updated as version 4.0
Earlier versions of the document on Deposits were:
• Original dated 17th
August 2015
• Version 1.2 dated 6th
October 2015
September 2016
November 2017
STATUTORY SUMMARY
Sections Rules Forms
73-76A Companies (Acceptance of Deposit) Rules
2014
• Amendments / Notification /
Clarifications
o Amendment – 6th
June 2014
o Clarification– 30th
March 2015
o Amendment – 31st
March 2015
o Notification – 5th
June 2015
o Clarification – 18th
June 2015
o Amendment – 15th
September 2015
June 2016
May 2017
o Notification – 13th
June 2017
September 2017
o Amendment – 5th
July 2018
• Companies (Amendment) Act 2017
DPT 1
Circular or Circular in the
form of advertisement
inviting deposits
DPT 2 Deposit Trust Deed
DPT 3 Return of Deposits
DPT 4
Statement regarding
deposits existing on the
commencement of the
Act
AMOUNTS NOT TREATED AS DEPOSITS (FOR ALL COMPANIES)
There is a difference between a loan and a deposit. A deposit includes a loan, but every loan may
not be a deposit. Following amounts can be taken by all companies (may be a loan) but the same

CA. PRAMOD JAIN
are not deposits as per the Companies (Acceptance of Deposit) Rules 2014 as amended from
time to time:-
• Amount received from Central Government, State Government, Local Authority, Statutory
Authority
• Amount received from foreign government, foreign or international banks, multilateral
financial institutions, foreign export credit agencies, foreign collaborators, foreign bodies
corporate and foreign citizens, foreign authorities or persons resident outside India subject to
the provisions of Foreign Exchange Management Act
• Amount received as a loan or facility from banking Company, SBI, etc notified by CG as per
RBI Act
• Amount received as loan or financial assistance from Public Financial Institutions, Regional
Financial Institutions, Insurance Companies or Scheduled Banks
• Amount received against Commercial Papers, etc.
• Amount received by a Company from any other company [which is normally termed as Inter
Corporate Deposits (ICD)]
• Amount received pursuant to an offer towards subscription to any securities, including share
application money or advance, pending allotment
o Exception: If the securities not allotted within 60 days from the date of receipt of the
application money or advance and such amount is not refunded to the subscribers
within 15 days from the date of completion of 60 days, such amount shall be treated
as a deposit.
o Further any share application money is pending allotment prior to 1st
April 2014 is
also pending as on 31st
March 2015, then it was to be refunded by 1st
June 2015.
• Amount received from its director out of his own funds
• Amount received from its relatives of director out of his own funds by a private company
(w.e.f. 15th
September 2015)
• Bonds / debenture secured by first charge on any assets (excluding intangible assets) or
convertible into shares within 5 years (10 years w.e.f. 29th
June 2016)
• Listed unsecured non-convertible debentures (w.e.f. 29th
June 2016)
• Interest free security deposit from employee not exceeding his annual salary

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• Interest free amount received and held in Trust
• Business advances:
o For supply of goods or provision of services provided that such advance is
appropriated against supply of goods or provision of services within a period of 365
days. However, if the advance is subject matter of any legal proceedings before any
court of law the limit of 365 days would not be applicable.
o In connection with consideration for immovable property, provided that such advance
is adjusted as per agreement.
o Security deposit for performance of contract for supply of goods or provision of
services
o Advance under long term projects for supply of capital goods
o Advance for warranty or maintenance (AMC) as per written contract for period
prevalent as per common business practice or 5 year whichever is less (w.e.f. 29th
June 2016)
o Advance received and as allowed by any sectoral regulator or in accordance with
directions of Central or State Government (w.e.f. 29th
June 2016))
o Advance for subscription towards publication (in print or electronic) to be adjusted
against receipt of such publications (w.e.f. 29th
June 2016)
o Exception- If Company accepting money does not have necessary permission or
approval to deal in goods or properties or services, then amount received shall be
deemed to be deposits on the expiry of 15 days from the date they become due for
refund (except security deposit).
• Amount brought in by promoters as unsecured loans in stipulation of any lending Financial
Institution or Banks subject to:-
o Loan is brought in pursuance of stipulation imposed by lending institutions on
promoters to contribute such finance; and
o Loan is provided by the promoters themselves and/or by their relatives.
o Exemption available only till loans are repaid
• Amount received by Nidhi companies
• Amount received as subscription in respect of a chit under Chit Fund Act 1982 (w.e.f. 29th
June 2016)

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• Amount received under any collective investment scheme as per SEBI regulations (w.e.f. 29th
June 2016)
• Amount of Rs. 25 Lakhs or more in a single trench from a person received by a start-up
company by way of convertible note (convertible into equity shares or repayable within 5
years from date of issue) (w.e.f. 29th
June 2016)
• Amounts received from Alternative Investment Funds, Domestic Venture Capital Funds,
Infrastructure Investment Trusts (w.e.f. 11th May 2017) and Mutual Funds registered with
SEBI
DEPOSITS FROM MEMBERS
Deposits from
Members
Prior to 5th
June 2015
All Companies
Comply with
Sec 73(2)
From 5th June
2015 to 28th
June 2016
Private
Companies
Upto 100% of its
paid up capital &
free reserves
without
complying s.
73(2)(a) to (e).
Other than
Private
Companies
Upto 25% (10%
for elegible
company) of paid
up capital,
securities
premium and free
reserves. Comply
with Sec 73(2)
From 29th June
2016 to 12th
June 2017
Private
Companies
Upto 100% of its
paid up capital,
securities
premium & free
reserves without
complying s.
73(2)(a) to (e).
Other than
Private
Companies
Upto 35%
(10% for
elegible
company) of its
paid up capital,
securities
premium and
free reserves.
comply with
73(2)

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Deposits from Members
From 13th June 2017 to
18th September 2017
Private Companies
without default in filing
AOC-4 or MGT-7
Start-up
For 5 Years
without limit
without complying
s. 73(2)(a) to (e)
Other than Start-
up
If 3 conditions
met
Without any limit
without complying
s. 73(2)(a) to (e)
Other
Companies
Upto 100% of its
paid up capital &
free reserves
without complying
s. 73(2)(a) to (e)
Other Companies
including Private
Companies with default in
filing AOC-4 or MGT-7
Upto 35% (10%
for elegible
company) of its
paid up capital,
securities premium
and free reserves.
Comply with Sec
73(2)

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In the above chart (from 19th
September 2017) in case Private Company is in default in
filing AOC-4 or MGT-7, then the limits for start-up and other than start-up companies
remains same, but they would have to comply with conditions of S. 73(2) on or after 19th
September 2017
There have been numerous changes in acceptance of deposits by a company from its members.
The basic provision is u/s 73(2) of the Companies Act, 2013 read with Companies (Acceptance
of Deposit) Rules 2014 as amended from time to time and exemption for Private Companies
notification dated 5th
June 2015 as amended later. The position of acceptance of deposits from
members is given in above charts and also summarized in brief hereafter:
Deposits from
Members
From 19th September
2017
Private
Companies
without default in
filing AOC-4 or
MGT-7
Start-up
For 5 Years
without
limit
without
complying
s. 73(2)(a)
to (e)
Other than
Start-up
If 3
conditions
met
Without
any limit
without
complying
s. 73(2)(a)
to (e)
Other
Companie
s
Upto 100%
of its paid
up capital,
securities
premium &
free
reserves
without
complying
s. 73(2)(a)
to (e)
Public
Companies
Specified
IFSC Public
company
Upto
100% of
its paid up
capital,
Securities
Premium
& free
reserves
Comply
with Sec
73(2)
Eligible
Public
Companies
Upto 10%
of its paid
up capital,
securities
premium
and free
reserves.
Comply
with Sec
73(2)
Other
Companies
Upto 35%
of its paid
up capital,
securities
premium
and free
reserves.
Comply
with Sec
73(2)

CA. PRAMOD JAIN
PRIVATE COMPANIES
Deposits from Members by Private Companies (w.e.f. 13th
June 2017 and thereafter 19th
September 2017)
Private companies can accept deposits from its members to the extent of 100% of its paid up
share capital, securities premium and free reserves without complying with the conditions as
stated in section 73(2) (a) to (e) of the Companies Act 2013. It is pertinent to note that these
amounts received would be deposits and the company would have to:
• Comply with the terms and conditions of Companies (Acceptance of Deposit) Rules
2014; and
• File the details of monies so accepted to the Registrar in Form DPT 3 (w.e.f. 19th
September 2017)
However the limit of 100% of its paid up share capital, securities premium and free reserves
would not be applicable for few private companies [without complying with the conditions as
stated in section 73(2) (a) to (e)] such as:
• Which is a start-up, for 5 years from the date of its incorporation
• Which fulfils all of the following conditions:
o is not an associate or a subsidiary company of any other company;
o the borrowings of such a company from banks or financial institutions or any
body corporate is less than twice of its paid up share capital or Rs. 50 Crores,
whichever is less ; and
o such a company has not defaulted in the repayment of such borrowings subsisting
at the time of accepting deposits u/s 73
The above said exemption was brought in through amendment to private companies exemption
June 2015. However, it is interesting to note that a private company as
stated above can accept deposits from its members without complying with the conditions as
stated in section 73(2) (a) to (e) of the Companies Act, 2013 but in case it defaults in filing its
Financial Statements u/s 137 i.e. Form AOC-4 or Annual Return u/s 92 i.e. Form MGT 7, then
the benefit of non-compliance of section 73(2) (a) to (e) of the Companies Act, 2013 would not
be available (as notified vide notification dated 13th
June 2017). Consequently, the defaulting
company cannot take the benefit of the exemption notification and in case of default apart from
the section 73(2) non-compliance benefits, the enhanced limits of acceptance would also be not
allowed.

CA. PRAMOD JAIN
What is a default in such case of filing is an unsettled preposition. However, as per my view, if
the compliance is made within the due dates as prescribed under relevant sections i.e., s. 92/137,
then there is no default. Filing thereafter even with additional fee could be a default. Here it is
pertinent to note that upto 6th
May 2018 ss. 92/137 allowed the forms to be filed with additional
fee within the time given u/s 403 i.e. additional 9 months, hence till 6th
May 2018 if these were
filed along with additional fee within 9 months after the due dates given, there was no default.
However, w.e.f. 7th
May 2018, the time limit u/s 403 has been removed from ss. 92/137, so when
the forms are filed after the due date, there is a default and the company cannot take benefit of
the private company exemption notification.
However, the same exemptions were brought in Companies (Acceptance of Deposit) Rules 2014
vide notification dated 19th
September 2017. Consequently w.e.f. 19th
September 2017, though
the defaulting companies can now avail of the enhanced acceptance of deposits limits, but it
cannot avail of non-compliance benefits of section 73(2) clauses (a) to (e).
Also companies accepting deposits from members will have to file Annual Return of Deposits in
Form DPT 3 (w.e.f. 19th
September 2017)
Deposits from Members by Private Companies (from 29th
June 2016 to 12th
June 2017)
Private companies can accept deposits from its members to the extent of 100% of its paid up
capital, securities premium and free reserves without complying with the conditions as stated in
section 73(2) (a) to (e). However, it is pertinent to note that as these amounts received would be
deposits and such company would have to:
2014; and
• File the details of monies so accepted to the Registrar in the manner so prescribed.
Deposits from Members by Private Companies (from 5th
June 2015 to 28th
June 2016)
Private companies could have accepted deposits from its members to the extent of 100% of its
paid up capital and free reserves without complying with the conditions as stated in section 73(2)
(a) to (e). However, as these amounts received were deposits and such company would have to:
2014; and
• File the details of monies so accepted to the Registrar in the manner so prescribed.

CA. PRAMOD JAIN
OTHER THAN PRIVATE COMPANIES
Deposits from Members by Specified IFSC Public company (w.e.f. 19th September 2017)
A Specified IFSC Public company i.e. an unlisted public company which is licensed to operate
by RBI or SEBI or IRDA from the International Financial Services Centre located in an
approved multi services SEZ can accept from its members monies not exceeding 100% of
aggregate of the paid up share capital, free reserves and securities premium account and such
company shall file the details of monies so accepted to the Registrar in Form DPT-3.
However, they have to comply with provisions of Section 73(2) of Companies Act 2013 and
Companies (Acceptance of Deposit) Rules 2014
Deposits from Members by Other than Private Companies & Specified IFSC Public
company (w.e.f. 29th
June 2016)
Companies other than Private companies & Specified IFSC Public Company can accept deposits
from its members to the extent of 35% of its paid up capital. Also they have to comply with
provisions of Section 73(2) of Companies Act 2013 and Companies (Acceptance of Deposit)
Rules 2014.
Deposits from Members by Other than Private Companies (w.e.f. 29th
June 2016)
Companies other than Private companies can accept deposits from its members to the extent of
35% of its paid up capital, securities premium and free reserves. Earlier this limit was 25%.
However these companies will have to comply with the conditions as stated in section 73(2) and
Companies (Acceptance of Deposit) Rules 2014 as amended from time to time. The conditions
to be complied are given in the below note (Deposits from Members by Pubic Company and
Private Companies prior to 5th
June 2015)
Deposits from Members by Pubic Company and Private Companies prior to 5th
June 2015
Subject to the passing of a resolution in general meeting and fulfilment of the following
conditions a company can take deposit from its members [to the extent of 25% of paid up capital
and free reserves (and securities premium account w.e.f. 15th
September 2015)]:-
• File DPT-1with ROC
Issue a circular (DPT-1) to its members including therein a statement showing the financial
position of the company, the credit rating obtained, the total number of depositors and the

CA. PRAMOD JAIN
amount due towards deposits in respect of any previous deposits accepted by the company
and such other particulars in such form;
File a copy of the circular and statement with the Registrar within 30 days before the date of
issue of the circular. Such circular has to be issued to members by registered post with
acknowledgement due or speed post or by electronic mode.
W.e.f. 15th
August 2018, a certificate from Statutory Auditor is required as per 2nd
Proviso to
Rule 4(1) of Companies (Acceptance of Deposit) Rules 2014 as amended vide notification
dated 5th
July 2018 is to be attached along with DPT 1.
• Deposit Trust Deed
The company shall execute a deposit trust deed in Form (DPT-2) at least seven days before
issuing the circular.
• Maintenance of Liquid Fund
Deposit sum which shall not be less than 15% of the deposits maturing during a financial
year and the financial year next following, and keep in a scheduled bank in a separate bank
account to be called as deposit repayment reserve account. The limit has been revised to 20%
of the deposits maturing during a financial year w.e.f. 15th
August 2018 vide notification
dated 5th
July 2018.
• Certificate from the Company
Certify that the company has not committed any default in the repayment of deposits
accepted or payment of interest on such deposits.
• Security for the repayment at the option of the Company
In case of issue of secured deposits, provide security, way of a charge on its assets excluding
intangible assets of the company for the repayment of the amount of deposit and interest
thereon for an amount which shall not be less than the amount remaining unsecured by the
deposit insurance.
• Deposit Insurance
Company shall enter into a contract for providing deposit insurance at least 30 days before
the issue of circular. However the company is exempted from obtaining deposit insurance till
31st
March 2018 or availability of deposit insurance product whichever is earlier. W.e.f. 15th
August 2018, deposit insurance is not required as Rule 5 has been omitted vide notification
dated 5th
July 2018.

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• Deposit Receipt
Furnish receipt within 21 days of amount received, to the depositors.
• Maintain deposit register and make entries within 7 days of issuance of receipt
• No company shall accept deposits from members which are repayable on demand or upon
receiving a notice within a period of less than 6 months or more than 36 months from the
date of acceptance or renewal of such deposit.
Exception-company may, accept or renew such deposits subject to the condition that:
o Such deposits shall not exceed 10% paid up share capital and free reserves (and
securities premium account w.e.f. 15th
September 2015) of the company, and
o Such deposits are repayable not earlier than 3 months from the date of such deposits
or renewal.
• No company shall accept or renew any deposit from its members, if total deposits from
members exceed 25% of its paid up capital and free reserve (and securities premium account
w.e.f. 15th
September 2015). However an eligible company can only accept deposits from its
members to the extent of 10% of its paid up capital and free reserve (and securities premium
account w.e.f. 15th
September 2015).
DEPOSITS FROM DIRECTORS
Any company can accept amount from a person who is its director at the time of receipt of the
amount out of his own funds. For this purpose the director will have to submit a declaration with
the Company that amount is not being given out of funds acquired by him by borrowing or
accepting loans or deposits from others. Such amounts are not deposits as per Companies
(Acceptance of Deposit) Rules, 2014.
However, consequent to amendment in Companies (Acceptance of Deposit) Rules 2014 w.e.f.
15th
September 2015 amounts received from directors out of their own funds are to be reported in
Directors Report. Hence, any Director’s Report prepared after 15th
September 2015 would
require disclosing this information.
Also it is pertinent to note that consequent to amendment in Companies (Acceptance of Deposit)
Rules 2014 w.e.f. 29th
June 2016 amounts received from directors out of their own funds are also
to be disclosed in Financial Statements (in Notes to the Accounts).

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DEPOSITS FROM RELATIVES OF DIRECTORS
Under Companies Act, 1956 only a private company could have received a loan from relatives of
a director. However, under the Companies Act 2013 initially no company was allowed to receive
any loan from relatives of its director.
Later Companies (Acceptance of Deposit) Rules 2014 was amended w.e.f. 15th
September 2015
to allow private companies to accept amounts from relatives of a director out of their own funds.
For this purpose the relative will have to submit a declaration with the Company that amount is
not being given out of funds acquired by them by borrowing or accepting loans or deposits from
others. Such amounts are not deposits as per amended Companies (Acceptance of Deposit)
Rules, 2014. It is pertinent to note that even after the amendment a public company cannot
accept amounts from relatives of its directors.
Relatives for this purpose means:
• Husband and wife;
• Father (including step-father);
• Mother (including step-mother);
• Son (including step-son);
• Son’s wife;
• Daughter;
• Daughter’s husband;
• Brother (including step-brother); and
• Sister (including step-sister).
Consequent to amendment in Companies (Acceptance of Deposit) Rules 2014 w.e.f. 15th
September 2015 amounts received from relatives of directors by a private company out of their
own funds are to be reported in Directors Report. Hence, any Director’s Report prepared after
15th
September 2015 would require disclosing this information.
Also it is pertinent to note that consequent to amendment in Companies (Acceptance of Deposit)
Rules 2014 w.e.f. 29th
June 2016 amounts received from relatives of directors out of their own
funds are also to be disclosed in Financial Statements (in Notes to the Accounts).

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DEPOSITS FROM DIRECTORS WHO ARE ALSO SHAREHOLDERS
A question has been raised several times about what happens when an amount is received from a
person who is a director as well as a shareholder. There is no express provision regarding this in
the Companies Act, 2013, yet I would try and interpret to best of my ability.
Before we discuss further on this issue, an important point to note is that an amount received
from director out of his own funds is not a deposit. However if the same is received out of
borrowed funds, it would be a deposit and provisions of section 76 read with Companies
(Acceptance of Deposit) Rules 2014 would be applicable and only eligible companies can accept
such a deposit within the specified limits. An Eligible Company is a Public Company which has
either minimum Net-Worth of Rs. 100 crores or Turnover of Rs. 500 Crores. Hence, a private
company accepting such deposit from the director would result in penalties for the contravention.
However, amount received from a shareholder is a deposit u/s 73(2) whether out of own funds or
from borrowed funds.
A person can have several relationships with a company; say he could be a director, a
shareholder, a relative of a director, a relative of a shareholder, etc. It would be important to see,
in which capacity the person has given the amount and in which capacity the company has
accepted the same. If a person having several relationships with the company gives the amount to
the company as a director of that company and the company too accepts the same as from a
director of a company, then the same should be held as a loan from a director only.
DEPOSITS BY PRIVATE COMPANIES
Tough it has been discussed in various paragraphs above, but with a view to summarize what
amounts can be received by a private company, this section is being made.
A private company can accept any amount which is not a deposit (as stated at page no. 3-6 of this
document). Summarising below few most talked about amounts which a private company can
accept (as on the date of this document):
• Amounts which are not deposits (as stated at page no. 3-6 of this document) including:
o Amount received by a Company from any other company [which is normally
termed as Inter Corporate Deposits (ICD)]
o Amount received from its director out of his own funds (Details to be disclosed in
Financial Statements)
o Amount received from its relatives of director out of his own funds (Details to be
disclosed in Financial Statements)

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• Amounts which are deposits wherein though the conditions as stated in section 73(2) (a)
to (e) are not to be complied, yet deposit rules are to be complied and DPT 3 is to be
filed:
o A start-up company from its members for five years from the date of its
incorporation
o Any other Private Company from its members to the extent of 100% of its paid up
share capital, securities premium and free reserves
o Any other Private Company from its members without any limit if:
It is not an associate or a subsidiary company of any other company;
Its borrowings company from banks or financial institutions or any body
corporate is less than twice of its paid up share capital or Rs. 50 Crores,
whichever is less ; and
It has not defaulted in the repayment of such borrowings subsisting at the
time of accepting deposits u/s 73
It is interesting to note that a private company as stated above can accept deposits from its
members without complying with the conditions as stated in section 73(2) (a) to (e) of the
Companies Act, 2013 but in case the private company defaults in filing its Financial Statements
u/s 137 i.e. Form AOC-4 or Annual Return u/s 92 i.e. Form MGT 7, then the benefit of non-
compliance of section 73(2) (a) to (e) of the Companies Act, 2013 would not be available (as
notified vide notification dated 13th
June 2017)
DEPOSITS BY PUBLIC COMPANIES
A Public company can accept any amount which is not a deposit (as stated at page no. 3-6 of this
document). However summarising below, few most talked about amounts which a public
company (other than a eligible company) can accept:
• Amounts which are not deposits (as stated at page no. 3-6 of this document) including:
o Amount received by a Company from any other company [which is normally
termed as Inter Corporate Deposits (ICD)]
o Amount received from its director out of his own funds (Details to be disclosed in
Financial Statements)
A Specified IFSC Public company w.e.f. 19th
September 2017 can accept from its members
monies not exceeding 100% of aggregate of the paid up share capital, free reserves and securities
premium account and such company shall file the details of monies so accepted to the Registrar
in Form DPT-3

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DEPOSITS FROM PUBLIC
Following may invite, accept or renew public deposits:
• Banking companies defined in Reserve Bank of India Act, 1934.
• Non-Banking Financial Companies defined in the Reserve Bank of India Act, 1934.
• Notified companies, by central Government after consultation with RBI.
• Public company having net worth not less than Rs. 100 Crs. or turnover not less than Rs.
500 Crs. (Eligible Company)
An Eligible Company shall be required to:-
• Pass Special resolution and file the same with the Registrar of Companies before making any
invitation to the Public.
• Obtain rating (including its net-worth, liquidity and ability to pay its deposits on due date)
from a recognised credit rating agency and file the same along with Return of Deposits in
Form DPT 3. As amended by notification dated 29th
June 2016 the eligible company has to
obtain such credit rating at least once a year and file to ROC along with DPT 3 and such
rating shall not be below the minimum investment grade rating or specified credit rating for
fixed deposits from any approved credit rating agencies by RBI
• Company accepting secured deposits from the public shall within 30 days of such
acceptance, create a charge on its assets of an amount not less than the amount of deposits
accepted.
• Issue a circular (DPT-1) in English language and in vernacular language in one vernacular
newspaper having wide circulation in the State in which the registered office of the company
is situated. It shall also have to place such circular on its website, if any (as amended by
June 2016 and further 7th
July 2018)
Company shall enter into a contract for providing deposit insurance at least 30 days before
the issue of circular. However the company is exempted to obtain deposit insurance till 31st
March 2018 or availability of deposit insurance product whichever is earlier. W.e.f. 15th
August 2018, deposit insurance is not required as Rule 5 has been omitted vide notification
dated 5th
July 2018.
• The company shall execute a deposit trust deed in Form (DPT-2) at least seven days before
issuing the circular.
• Furnish receipt within 21 days of amount received to the depositor.

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Deposit sum which shall not be less than 15% of the deposits maturing during a financial
year and the financial year next following, and keep in a scheduled bank in a separate bank
account to be called as deposit repayment reserve account. The limit has been revised to 20%
of the deposits maturing during a financial year w.e.f. 15th
August 2018 vide notification
dated 5th
July 2018.
• Government Company shall not accept or renew any deposit, if Total Deposits exceeds 35%
of paid up capital and free reserves (and securities premium account w.e.f. 15th
September
2015).
• No company shall invite or accept or renew any deposit in any form, carrying a rate of
interest or pay brokerage thereon at a rate exceeding NBFC norms.
• An eligible company can accept deposits from public only to the extent of 25% of its paid up
capital and free reserve (and securities premium account w.e.f. 15th
September 2015).
PREMATURE SURRENDER OF DEPOSITS
Subject to certain conditions, a depositor may request for premature of deposit. In such case if
the repayment of the deposit is made after the expiry of 6 months from the date of deposit, but
before the maturity date of deposit, then the interest rate on such deposit has to be reduced by
1%.
RETURN OF DEPOSITS
Every Company accepting or renewing deposits has to:
• File with the Registrar an annual return of deposits in Form DPT 3
• Before the 30th day of June (as on 31st March) each year
• Audited by the statutory auditor of the company
It is pertinent to note that:
• a Specified IFSC Public company; and
• a private company
accepting deposits from members as allowed by Companies (Acceptance of Deposit) Rules
2014 as amended by amendment rules notified on 19th September 2017 have also to file Form
DPT 3.

CA. PRAMOD JAIN
EXISTING DEPOSITS
Except for amounts received by Private companies from Shareholders and Directors’ Relatives
(which has been summarised in the table above, the remaining deposits accepted before
commencement of Companies Act, 2013 has to be treated as under:-
• File within a period of three months, the amounts of:
• deposits or
• parts of deposits or
• any interest on deposits
remaining unpaid on such:
• commencement of the Act, or
Amounts received by Private Companies from
Shareholders (Members) and Relatives of
Directors
Prior to 1 April, 2014
Are NOT Deposits
(No need to file DPT-4)
Renewal or Acceptance of deposits on or
after 1st April, 2014
From Members
Prior to
05.06.2015
See page 6-13 of
this document
Post
05.06.2015
See Page 6-13 of
this document
From Relatives
of Directors
Prior to
15.09.2015
See Page 14
of this
document
Post
15.09.2015
See Page 14
of this
document

CA. PRAMOD JAIN
• becomes due at any time thereafter
with the Registrar, a statement (DPT-4) 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,
• Repay within one year from such commencement or from the date on which such payments
are due, whichever is earlier.
• CLB may on an application made by the company, after considering the financial condition
of the company allow further time as considered reasonable to the company to repay the
deposit.
• If a company fails to repay the deposit or part thereof or any interest thereon within the time
and further the time as may be allowed by the Tribunal, then in addition to the payment of
the amount of deposit or part thereof and the interest due, be punishable.
PENAL INTEREST
A company shall have to pay an interest of 18% p.a. for the overdue period of deposits, matured
and claimed but remaining unpaid.
PUNISHMENT
Contravention
• 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 thereunder or
• 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 thereunder or such further time as may be
allowed by the Tribunal under section 73
On Company
• Payment of the amount of depositor part thereof and the interest due; and
• Fine which shall not be less than Rs. 1 Crore rupees (changed to Rs. 1 Cr or twice the amount
of deposit, whichever is lower w.e.f. 9th
February 2018 through Companies (Amendment)
Act 2017) but which may extend to Rs. 10 Crore

CA. PRAMOD JAIN
On Officer in Default
• Imprisonment which may extend to 7 years; or (changed to AND w.e.f. 9th
February 2018
through Companies (Amendment) Act 2017)
• Fine which shall not be less than Rs. 25 Lacs but which may extend to Rs. 2 crores; or
• Both
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 (fraud).
Contravention of Rules
If any company contravenes any provisions of Companies (Acceptance of Deposit) Rules, 2014
for which no punishment is provided in the Act, then the company and every officer in default
shall be punishable with fine which may extend to Rs. 5000/- and in case of continuing default
Rs. 500/- per day during which the default continues.
I hope this document is of use to you. Your suggestions and comments would be highly
appreciated
Best Regards
CA. Pramod Jain
pramodjain@lunawat.com
+91 9811073867
(Disclaimer: Though full efforts have been made to state the interpretations correctly, yet the
author is not responsible / liable for any loss or damage caused to anyone due to any mistake /
error / omissions)

Understanding Deposits Rules for Companies

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