Acceptance of public deposits

1. Acceptance of Public Deposits
Critical Aspects
Acceptance of Public Deposits
Critical Aspects

2. REGULATORY FRAMEWORK FOR PUBLIC DEPOSITS
AS PER COMPANIES ACT 2013
Chapter V: Acceptance of Deposits by Companies
Section 2(31): Definition of Deposits.
Section 73: Prohibition on acceptance of Deposits from Public
Section 74: Repayment of Deposits, etc. accepted before commencement
of this Act
Section 75: Damages for Fraud
Section 76: Acceptance of deposits from Public by certain Companies
Section 76A: Punishment for contravention of section 73 or section 76
•The Companies (Acceptance of Deposits) Rules, 2014

3. Deposits –
As per Section 2(31) of the Companies Act, 2013
“Deposit” includes any receipt of money by way of deposit or loan or in
any other form by a Company, but does not include such categories of amount
as may be prescribed in consultation with the Reserve Bank of India.

4. Amounts exempted from Deposits
• Any share application money accepted under this Act shall be treated as Deposit if
allotment is not made within 60 days.
• Customers Advances if not appropriated within 365 days shall be deposit.
• Convertible Bond or debentures with conversion period of more than 10 years are
deemed deposit.
• Any amount received by a company from any other company shall not be treated as
Deposits.
• Any amount received from the Government/ Authority shall not be treated as Deposits.

5. • Any amount received from a person who, at the time of the receipt of the amount,
was a director of the company or a relative of the director of the private company
shall not be treated as Deposit.
• Any amount received from an employee of the company exceeding his annual salary
with the company shall be treated as Deposit.
• An amount of Rs. 25 lacs or more received by a start-up company by way of a
convertible note (convertible into equity shares or repayable within a period not
exceeding five years from the date of issue) in a single tranche, from a person shall
not be treated as Deposit.
• Any amount received as a loan from any Banking Company/ S.B.I/ P.F.I/ Insurance
Companies/ Schedule Banks shall not be treated as Deposits.
Amounts exempted from Deposits

6. From whom Deposits can be accepted??
Eligible CompanyEligible Company Non-Eligible Public CompanyNon-Eligible Public Company Private CompanyPrivate Company
From any memberFrom any memberFrom PublicFrom Public
* Eligible Companies are Public Companies having net
worth of at least INR 100 crore or turnover of at least INR
500 crore and are allowed to raise deposits from the
persons other than its members

7. Limit on Acceptance of Deposits
C
O
M
P
A
N
I
E
S
DEPOSITS
Deposits From Public From Members
By Eligible Companies 25% of paid-up capital,
free reserves and
securities premium
account.
10% of paid-up capital,
free reserves and
securities premium
account
By Public Company (Non-eligible
Company)
- 35% of paid-up capital,
free reserves and
securities premium
account
By Private Company - 100% of paid-up capital,
free reserves and
securities premium
account
By Government Company 35% of paid-up capital, free reserves and securities
premium account

8. Period for Accepting Deposits
* A company may, for the purpose of meeting its short term
requirement, accept the deposits for repayment earlier than 6 months,
but not earlier than 3 months & such deposits shall not exceed 10 %
of paid-up share capital, free reserves & security premium account.
No Company shall accept any deposit which is repayable within a
period of :-
Less than 6
months
Less than 6
months
More than
36 months
More than
36 monthsOR

9. Non-Applicability of Public Deposits Rules
on certain Companies

10. RESOLUTIONS REQUIRED

11. Important Compliances
Issuance of Circular to all its
members by registered post or
speed post or by electronic mode
in Form DPT-1
Filing a copy of the Circular with
ROC within 30 days before the
date of issuance of the Circular.
Not applicable on
private company
Not applicable on
private company

12. Deposit Repayment Reserve Account
As per Section 73 (2) (c) of the Companies Act, 2013 read with Rule 13 of the
Companies (Acceptance of Deposits) Rules, 2014, a deposit of not less than 15% of
the amount of its deposits maturing during the Financial Year and the next
following financial year is required to be maintained with scheduled commercial
bank in a separate bank account to be called as Deposit Repayment
Reserve Account on or before the 30th day of April of each year.
For Example: If the Company came out with the Deposit Issue of Rs. 50 Crores wherein
Deposits amounting to Rs. 12 Crores are to be redeemed during the current financial
year and Rs. 20 Crores are proposed to be redeemed in the next financial year, then the
Company is required to deposit Rs. 4.80 Crores
(15% of 32 Crores)
Note- this provision is not applicable on private company

13. Important Filing
Every eligible company shall
* Furnishing of Return with ROC in Form DPT-3 on or
before 30th
June of every year for the period ended 31st
March as per the information duly audited by the Auditor.
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.

14. Penal Provisions
•Penal Rate of Interest: 18% per annum for the overdue period in case of deposits,
whether secured or unsecured, matured and claimed but remaining unpaid.
•Punishment for Contravention: Company & every officer of the Company who is in
default shall be punishable with fine which may extend to Rs. 5000 and where the
contravention is a continuing one, with a further fine which may extend to Rs. 500 for
every day after the first day during which the contravention continues.

15. 07/07/16
Corporate Professionals Capital Private Limited
D-28, South Extension –I, New Delhi-110 049
Ph: +91.11.40622200; Fax: +91.11.40622201; E: pkvijay@indiacp.com
Pavan Kumar Vijay
Thank You