Companies Act Chapter V - Acceptance of Deposits

Chapter architecture

Four questions decide the compliance route

1. Is it a deposit?

Apply the broad definition, then prove every condition of a specific exclusion.

2. Who provided the money?

Member, director, relative, company, customer, bank, fund, public or foreign source.

3. Which company is receiving it?

Private, startup, eligible public, Government company, NBFC, Nidhi or another regulated entity.

4. Are safeguards complete?

Resolution, DPT-1, limit, tenure, rating, reserve, security, trustee, receipt, register and DPT-3.

Continuous monitoring: exclusion testing is not frozen on receipt date. Failure to allot shares, adjust an advance or retain a required purpose can convert the balance into a deposit later.

Section, Rule, Form and company-class control

This page is integrated with the section index, Rules and MCA Forms repository, company-class matrix and transaction workflows. Current MCA/Gazette instruments and portal instruction kits control.

Full statutory register

Sections 73 to 76A - Bare Act and simple decode

Section 73

Prohibition and member-deposit framework

Control who can accept deposits and under what safeguards.

73. Prohibition on acceptance of deposits from public.—(1) On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter: Provided that nothing in this sub-section shall apply to a banking company and non-banking financial company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) and to such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf. (2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely:— (a) issuance of a circular 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 amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed; (b) filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular; 1. Sub-section (11) omitted by Act 29 of 2020, s. 15 (w.e.f. 21-12-2020). (c) depositing, on or before the thirtieth day of April each year, such sum which shall not be less than twenty per cent. of the amount of its deposits maturing during the following financial year and kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account; * * * * * (e) certifying that the company 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 and where a default had occurred, the company made good the default and a period of five years had lapsed since the date of making good the default; and (f) providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company: Provided that in case where a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as “unsecured deposits” and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits. (3) Every deposit accepted by a company under sub-section (2) shall be repaid with interest in accordance with the terms and conditions of the agreement referred to in that sub-section. (4) Where a company fails to repay the deposit or part thereof or any interest thereon under sub-section (3), the depositor concerned may apply to the Tribunal for an order directing the company to pay the sum due or for any loss or damage incurred by him as a result of such non-payment and for such other orders as the Tribunal may deem fit. (5) The deposit repayment reserve account referred to in clause (c) of sub-section (2) shall not be used by the company for any purpose other than repayment of deposits.

Simple decode: Companies cannot invite or accept public deposits except under Chapter V. A company may accept deposits from members only after the required resolution, circular, filing, repayment reserve, no-default certification and security disclosure. Banking companies and RBI-regulated NBFCs sit outside this Chapter to the stated extent.

Practical example: A private company receiving a three-year interest-bearing loan from a shareholder must first test whether it is a deposit, whether a private-company limit exemption applies and whether DPT-1/DPT-3 requirements are triggered.

Section 74

Legacy deposits accepted before the 2013 Act

Require disclosure and repayment of old-law deposits.

74. Repayment of deposits, etc., accepted before commencement of this Act.—(1) 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 three 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 thereunder. (2) 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. (3) If a company fails to repay the deposit or part thereof or any interest thereon within the time specified in sub-section (1) or such further time as may be allowed by the Tribunal under sub-section (2), 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.

Simple decode: Outstanding pre-commencement deposits had to be reported and repaid within the statutory transition period or the original maturity, whichever was earlier, unless the Tribunal allowed more time. Renewal is permitted only under current Chapter V rules.

Practical example: A 2012 fixed deposit renewed after 1 April 2014 becomes subject to the current deposit framework rather than remaining permanently governed by the old terms.

Section 75

Personal liability for fraudulent acceptance

Pierce limited liability where deposits were accepted with fraudulent intent.

75. Damages for fraud.—(1) Where a company fails to repay the deposit or part thereof or any interest thereon referred to in section 74 within the time specified in sub-section (1) of that section or such further time as may be allowed by the Tribunal under sub-section (2) of that section, and it is proved that the deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every officer of the company who was responsible for the acceptance of such deposit shall, without prejudice to the provisions contained in sub-section (3) of that section and liability under section 447, be personally responsible, without any limitation of liability, for all or any of the losses or damages that may have been incurred by the depositors. (2) Any suit, proceedings or other action may be taken by any person, group of persons or any association of persons who had incurred any loss as a result of the failure of the company to repay the deposits or part thereof or any interest thereon.

Simple decode: If old deposits are not repaid and fraud is proved, responsible officers face unlimited personal liability for depositor losses in addition to section 74 penalties and section 447 exposure. Depositors may sue individually or collectively.

Practical example: Promoters who collected deposits while concealing insolvency can face personal damages claims, not merely a company-level penalty.

Section 76

Public deposits by eligible public companies

Permit public deposits only for financially qualifying public companies.

76. Acceptance of deposits from public by certain companies.—(1) Notwithstanding anything contained in section 73, a public company, having such net worth or turnover as may be prescribed, may accept deposits from persons other than its members subject to compliance with the requirements provided in sub-section (2) of section 73 and subject to such rules as the Central Government may, in consultation with the Reserve Bank of India, prescribe: Provided that such a company shall be required to obtain the rating (including its networth, liquidity and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public the rating given to the company at the time of invitation of deposits from the public which ensures adequate safety and the rating shall be obtained for every year during the tenure of deposits: Provided further that every company accepting secured deposits from the public shall within thirty days of such acceptance, create a charge on its assets of an amount not less than the amount of deposits accepted in favour of the deposit holders in accordance with such rules as may be prescribed. (2) The provisions of this Chapter shall, mutatis mutandis, apply to the acceptance of deposits from public under this section.

Simple decode: A public company meeting the prescribed net-worth or turnover test may accept deposits from non-members, subject to section 73 safeguards, annual credit rating and, for secured deposits, charge creation within thirty days. The public-deposit route is not open to every public company.

Practical example: A public company with ₹120 crore net worth can qualify as an eligible company, but it still needs the required resolution, DPT-1 advertisement, rating, limits and repayment safeguards.

Section 76A

Contravention and non-repayment penalties

Impose strong company and officer consequences.

76A. Punishment for contravention of section 73 or section 76.—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 thereunder 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 thereunder or such further time as may be allowed by the Tribunal under section73,— (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 which shall not be less than one crore rupees or twice the amount of deposit accepted by the company, whichever is lower but which may extend to ten crore rupees; and (b) every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years and with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, : 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.

Simple decode: Contravention of sections 73/76 or failure to repay attracts repayment plus company fine and potential imprisonment and fine for officers in default. Knowing or wilful deception can additionally trigger section 447.

Practical example: Using customer-style receipts to disguise a public deposit campaign does not avoid section 76A if the transaction is legally a deposit.

Rule 2 classification matrix

Receipts not treated as deposits - when every condition is met

Receipt category	Exclusion	Evidence / risk control
Government and statutory sources	Central/State Government, local authority, statutory authority, or amounts whose repayment is Government-guaranteed.	Retain sanction, guarantee and source evidence.
Foreign sources under FEMA	Foreign governments, foreign/international banks, multilateral institutions, foreign government-owned DFIs, foreign collaborators and foreign bodies corporate, subject to FEMA.	FEMA permission and purpose conditions remain separate.
Banks and co-operative banks	Loans or facilities from banking companies, SBI and specified banking institutions or co-operative banks.	A lender's regulatory character must be documented.
Public financial institutions	Amounts from notified public financial institutions, regional financial institutions, insurance companies and scheduled banks.	Check the institution's legal status at receipt date.
Inter-corporate money	Amounts received from another company.	LLP, partnership and individual lenders are not automatically covered by this exclusion.
Securities subscription money	Application or advance against shares, stock, bonds or debentures, if allotted within 60 days or refunded within the following 15 days.	Adjustment against another amount does not count as refund; delay converts it into a deposit.
Director funds	Money from a director, with written declaration that it is not sourced from borrowing or accepting loans.	Board's report disclosure is required.
Director's relative in private company	Money from a relative of a director of a private company with the required own-funds declaration.	Available only to a private company and subject to disclosure.
Secured / compulsorily convertible instruments	Secured bonds or debentures and compulsorily convertible instruments within ten years, subject to the rule.	Security and conversion terms must be genuine.
Listed unsecured NCD	Unsecured non-convertible debenture listed on a recognised stock exchange under SEBI regulations.	Unlisted unsecured debt does not get this exclusion merely because it is called an NCD.
Employee security deposit	Non-interest-bearing amount from an employee not exceeding annual salary under the employment contract.	Excess or interest-bearing amounts require separate analysis.
Money held in trust	Non-interest-bearing amount genuinely received and held in trust.	Trust character must be real and documented.
Goods or services advance	Business advance appropriated against supply within 365 days, unless legal proceedings explain delay.	Long-standing unadjusted advances can become deposits.
Immovable-property advance	Advance against immovable property under an agreement, adjusted according to the agreement.	Refundable investment-like money is not protected by the label.
Performance security	Security deposit for performance of a goods or services contract.	Amount and duration should be commercially linked to the contract.
Capital-goods project advance	Advance under a long-term project for supply of capital goods.	Use requires an actual long-term capital-goods contract.
Warranty / maintenance advance	Advance for future warranty or maintenance services within common business practice or five years, whichever is less.	Open-ended service advances are risky.
Regulator-permitted advance	Advance permitted by a sectoral regulator or under government directions.	Retain the exact regulatory authority.
Publication subscription	Advance for publication, whether print or electronic, adjusted against receipt.	The publication business and adjustment trail should be clear.
Promoter contribution loan	Unsecured promoter loan brought in because a lending institution stipulates promoter contribution; excluded only until institutional loans are repaid.	After repayment of the institutional facility, the exclusion can cease.
Nidhi / mutual benefit receipt	Amounts accepted by a Nidhi under the Nidhi framework.	Nidhi Rules, not ordinary Chapter V limits, govern the permitted member deposits.
Chit subscription	Subscription received under the Chit Funds Act framework.	Only a genuine registered chit arrangement qualifies.
Startup convertible note	₹25 lakh or more received in one tranche by an eligible startup through a convertible note, convertible or repayable within ten years.	Smaller tranches or expired startup status require re-analysis.
SEBI-regulated pooled investors	Amounts from AIFs, domestic venture capital funds, InvITs, REITs and SEBI-registered mutual funds.	Document registration and fund identity.

Failure effect: an excluded receipt is not permanently protected. Missing a 60-day allotment deadline, 15-day refund deadline, 365-day adjustment requirement or own-funds declaration can change the result.

Current rule register

Acceptance of Deposits Rules - rule by rule

Rule 1

Short title and commencement

The rules are the Companies (Acceptance of Deposits) Rules, 2014.
They commenced on 1 April 2014 and superseded the corresponding 1956 Act rules for covered matters.

Simple decode: This is the principal procedural rulebook for sections 73 and 76.

Practical example: Use it together with later amendments and current MCA form instructions.

Rule 2

Definitions and the deposit boundary

Defines deposit, depositor, eligible company and trustee.
Deposit is broad and includes money received by way of deposit, loan or otherwise unless a specific exclusion applies.
Eligible company is a public company with net worth of at least ₹100 crore or turnover of at least ₹500 crore and the prescribed member approval.
The exclusion list must be tested transaction by transaction and continuously.

Simple decode: The commercial label does not decide the result. Start with the broad rule and prove an exclusion.

Practical example: An 'advance' retained beyond its permitted business period can become a deposit.

Rule 3

Terms and conditions of acceptance

Deposits are generally accepted for 6 to 36 months.
Short-term deposits of 3 to under 6 months may be accepted for short-term needs within the 10% sub-limit.
Ordinary companies may accept member deposits up to 35% of paid-up capital, free reserves and securities premium.
Specified IFSC public companies and private companies may generally accept member money up to 100%; the cap does not apply to eligible startup private companies for ten years or to qualifying private companies meeting the independence, borrowing and no-default tests.
Eligible public companies may accept member deposits up to 10% and public deposits up to 25%; eligible Government companies may use the prescribed 35% limit.
Interest and brokerage cannot exceed the RBI-linked ceiling; eligible companies obtain annual investment-grade credit rating.

Simple decode: Tenure, source, company category and quantitative ceiling are separate tests.

Practical example: A private company exempt from the member-deposit percentage cap still files DPT-3 and complies with other applicable safeguards.

Rule 4

Circular or advertisement in DPT-1

Member deposits use a circular; eligible-company public deposits use a circular in the form of advertisement.
File the signed circular with the Registrar at least 30 days before issue.
Public advertisements appear in English and vernacular newspapers with wide State circulation and on the website.
The circular is signed by a majority of directors and includes financial, deposit, rating, default, security and management information.
An auditor certificate confirms no deposit default or that a cured default is at least five years old.
Validity runs until six months after financial-year close or the date financial statements are laid, whichever is earlier.

Simple decode: DPT-1 is a live investor-protection document, not a one-time brochure.

Practical example: A company accepting fresh deposits after the circular expires must renew and refile it.

Rule 5

Omitted deposit-insurance rule

Rule 5 was omitted from 15 August 2018.
Section 73(2)(d), which earlier referred to deposit insurance, was also omitted.

Simple decode: Deposit insurance is not a current Chapter V condition.

Practical example: Do not reject an otherwise compliant deposit only because no company-deposit insurance product exists.

Rule 6

Creation of security

Secured deposits require charge over suitable tangible assets sufficient to cover principal and interest.
Security value is assessed by a registered valuer and the secured amount cannot exceed market value.
The charge is created in favour of deposit holders through the trustee and registered under the charge provisions.
Partly secured or unsecured deposits must be clearly described as unsecured.

Simple decode: The word 'secured' requires real, valued and perfected security.

Practical example: A floating statement in DPT-1 without a registered charge does not make the deposit secured.

Rule 7

Appointment of deposit trustees

Trustees are appointed before issuing the circular or advertisement.
Written consent is obtained and the trust deed is executed in Form DPT-2 within the prescribed pre-issue period.
Directors, KMP, employees, relatives, indebted persons, guarantors and materially interested persons are disqualified.
Trustees cannot be removed after circular issue without the required consent of directors and depositors.

Simple decode: Trustee independence protects depositors from conflicted monitoring.

Practical example: The company's finance director cannot act as deposit trustee.

Rule 8

Duties of deposit trustees

Ensure assets and deposit limits are adequate, the circular is consistent with the trust deed and security is created.
Monitor covenants, defaults and repayment reserve.
Protect depositors, call for information and take reasonable steps when security or repayment is threatened.
Do not do anything prejudicial to depositors.

Simple decode: Trustee appointment is not ceremonial.

Practical example: A trustee should react when asset cover falls or interest is overdue.

Rule 9

Meeting of depositors

Trustees call a meeting on written request by depositors holding at least one-tenth in value.
A meeting is also called when an event affects depositors' interests.

Simple decode: Depositors have a collective governance mechanism.

Practical example: A material security-value collapse can justify a meeting even before maturity default.

Rule 10

Application form for deposits

The company uses an application containing a declaration that the money is not being deposited from borrowed funds.
Applicant and joint-holder particulars are captured.

Simple decode: The declaration is an anti-round-tripping control.

Practical example: A depositor should not fund the deposit through a loan merely to earn a spread.

Rule 11

Nomination

Section 72 nomination provisions apply to deposits.

Simple decode: Deposit nomination follows the statutory securities nomination framework.

Practical example: A sole depositor may nominate a person to receive the deposit on death.

Rule 12

Deposit receipt

Issue a receipt within 21 days of receipt, realisation or renewal.
The receipt states depositor name/address, amount, rate, date, duration, maturity and repayment terms.
It is signed by an authorised officer.

Simple decode: A bank entry alone is not the statutory deposit receipt.

Practical example: Maintain a controlled receipt series tied to the deposit register.

Rule 13

Deposit repayment reserve

On or before 30 April each year, deposit at least 20% of deposits maturing during the following financial year in a separate scheduled-bank account.
The balance must not fall below 20% of deposits maturing during that financial year.
The account is used only for repayment of deposits.

Simple decode: This is a ring-fenced liquidity buffer, not general cash.

Practical example: A company cannot pledge the repayment reserve for working-capital borrowing.

Rule 14

Register of deposits

Maintain separate deposit registers at the registered office.
Record depositor identity, nomination, deposit amount, receipt number, rate, duration, maturity, interest, repayment and security particulars.
Entries are authenticated and records are preserved for at least eight years from the financial year of the latest entry.

Simple decode: The register should reconcile with bank, ledger, DPT-3 and receipts.

Practical example: Unreconciled depositor totals indicate a control failure.

Rule 15

Premature repayment

Where repayment is made on depositor request after six months but before maturity, interest is reduced by one percentage point from the rate applicable to the period actually run.
Company-initiated early repayment and renewal arrangements require the specific rule terms.

Simple decode: Premature repayment is not paid automatically at the original contracted rate.

Practical example: A 24-month deposit closed after 10 months receives the applicable 10-month rate less one percentage point.

Rule 16

Annual return in DPT-3

DPT-3 is filed on or before 30 June for information as at 31 March.
It covers deposits and/or transactions not considered deposits, as applicable.
The 2022 amendment requires the statutory auditor's declaration within the form.
The 2019 explanation applies the return to every company other than a Government company for the specified reporting.

Simple decode: DPT-3 is broader than a deposit return.

Practical example: A company with only director loans or inter-corporate loans may still have non-deposit reporting in DPT-3.

Rule 16A

Financial-statement disclosure and one-time return

Companies disclose money received from directors and, for private companies, relatives of directors in the notes.
Specified companies filed the historical one-time DPT-3 return for outstanding non-deposit money through 31 March 2019.

Simple decode: The one-time return is historical, while annual DPT-3 continues.

Practical example: Do not file the one-time purpose every year.

Rule 17

Penal interest

Overdue matured deposits attract penal interest at 18% per annum for the overdue period.

Simple decode: This rule operates in addition to repayment and statutory penalties.

Practical example: Delaying payment after maturity can be much more expensive than the contracted rate.

Rule 18

Power to exempt

The Central Government may exempt classes of companies from the Rules, subject to conditions.

Simple decode: An exemption must be traced to an actual notification.

Practical example: Do not infer exemption merely because an entity is government-linked or regulated.

Rule 19

Old deposits and transitional compliance

Deposits accepted under the 1956 Act may be repaid according to original terms where the statutory transitional conditions are met.
Renewal must comply with the 2013 Act and current Rules.

Simple decode: Old deposits do not receive an unlimited grandfathering.

Practical example: Changing maturity or terms can amount to renewal and trigger current compliance.

Rule 20

DPT-4 statement for pre-Act deposits

Companies used Form DPT-4 to report deposits existing at commencement and repayment arrangements.

Simple decode: This is primarily a legacy transition form.

Practical example: Do not confuse DPT-4 with the annual DPT-3 return.

Rule 21

Punishment for rule contravention

Where no specific punishment is provided in the Act, contravention of the Rules attracts the statutory rule-level penalty framework.

Simple decode: Specific sections 74, 75 and 76A remain more serious where applicable.

Practical example: A procedural breach can coexist with a substantive deposit offence.

Quantitative and timing controls

Deposit limits and deadlines

Test	Current rule
Ordinary company - member deposits	Up to 35% of paid-up capital + free reserves + securities premium.
Private / specified IFSC public company - member deposits	Generally up to 100%; certain startup or qualifying private companies have no percentage cap.
Eligible public company - members	Up to 10% of paid-up capital + free reserves + securities premium.
Eligible public company - public	Up to 25% of paid-up capital + free reserves + securities premium.
Eligible Government company - public	Up to the prescribed 35% aggregate limit.
Short-term deposits	3 to under 6 months, within 10% sub-limit, for short-term requirements.
Ordinary tenure	At least 6 months and not more than 36 months.
Interest ceiling	RBI-linked ceiling; current RBI NBFC public-deposit ceiling is 12.5% p.a.
Repayment reserve	20% of deposits maturing during the following financial year by 30 April.

Denominator: percentage limits use paid-up share capital, free reserves and securities premium, subject to the exact rule wording and latest audited financial statements.

Forms and evidence

Primary compliance matrix

Form / evidence	Purpose	Legal link
DPT-1	Circular or circular in the form of advertisement inviting deposits	Sections 73/76; Rule 4
DPT-2	Deposit trust deed	Rules 7 and 8
DPT-3	Annual return of deposits and/or non-deposit transactions	Rules 3, 16 and 16A; auditor declaration added in 2022
DPT-4	Legacy statement for deposits existing at commencement	Section 74; Rule 20
CHG-1	Registration or modification of charge securing deposits	Sections 76 and 77; Charges Rules
MGT-14	Filing special/ordinary member resolutions where applicable	Sections 73/76 and Rule 2 eligible-company approval
NCLT-1	Application to Tribunal for repayment order or extension, as applicable	Sections 73(4) and 74(2); NCLT Rules
Deposit receipt	Acknowledgement issued within 21 days	Rule 12
Deposit register	Registered-office record preserved for at least eight years	Rule 14
Credit-rating letter	Annual investment-grade rating for eligible company	Section 76 and Rule 3(8)
Valuation report	Security coverage for secured deposits	Rule 6
Bank confirmation	Evidence of deposit repayment reserve	Section 73(2)(c) and Rule 13

Exceptions and highlights

Non-negotiable points

Deposit is deliberately broad: every receipt of money is tested unless a specific exclusion is proved.
A transaction can start as a non-deposit and later become a deposit when a time limit or condition fails.
Private-company percentage relief does not remove DPT-3, register, receipt or other applicable obligations.
Director and director-relative exclusions require a written own-funds declaration and Board-report disclosure.
Securities application money becomes a deposit if allotment/refund deadlines are missed.
Rule 5 deposit insurance was omitted from 15 August 2018 and is not a current requirement.
Deposit repayment reserve is ring-fenced and cannot fund ordinary operations.
Eligible-company public deposits require annual credit rating throughout the deposit tenure.
Secured deposit status requires real asset cover, valuation and charge perfection; otherwise describe it as unsecured.
Chapter V deposits are regulated deposit schemes under the Banning of Unregulated Deposit Schemes Act, but disguised or non-compliant fund raising can still create BUDS Act exposure.
RBI-regulated deposit-taking NBFCs require specific RBI permission and follow RBI directions rather than ordinary Chapter V in the manner stated by section 73.
The latest identified amendment to the MCA Deposit Rules is the 29 August 2022 substitution of DPT-3/DPT-4 and auditor declaration requirement.

Finin2min summary

Deposit classification and compliance map

CA / CS / finance professional cases

Applied case studies

1. Share application money not allotted

A company receives ₹2 crore for shares but does not allot within 60 days and refunds after another 40 days.

Analysis: The exclusion fails after the permitted allotment/refund window. The amount becomes a deposit from the relevant date and can trigger Chapter V non-compliance.

2. Director loan funded by bank borrowing

A director borrows personally from a bank and transfers the money to the company with a declaration that it is personal money.

Analysis: The director exclusion requires money not sourced from borrowing or accepting loans. A false declaration does not preserve the exclusion and may trigger false-statement consequences.

3. Relative of director funds a public company

The managing director's spouse gives an unsecured three-year loan to a public company.

Analysis: The relative-of-director exclusion is specific to a private company. For a public company the receipt must fit another exclusion or comply as a deposit.

4. Private-company no-cap claim

A private company is a subsidiary of another company and argues that member deposits have no percentage cap.

Analysis: The no-cap qualifying-private-company relief requires, among other conditions, that the company is not an associate or subsidiary. The ordinary applicable limit must be tested.

5. Startup convertible note below ₹25 lakh

A recognised startup receives ₹10 lakh under a convertible-note document.

Analysis: The rule exclusion requires at least ₹25 lakh in a single tranche from a person. The label alone does not qualify.

6. Advance for services held for three years

A customer advance for services remains unadjusted for three years with no litigation or sector-regulator basis.

Analysis: The ordinary 365-day business-advance exclusion is at risk. The balance should be reclassified and deposit compliance assessed.

7. Member deposit without DPT-1

A private company receives interest-bearing deposits from members after only a Board resolution.

Analysis: Member deposits require the applicable general-meeting resolution, DPT-1 process and other safeguards unless a specific exemption applies.

8. Public deposit by small public company

A public company with net worth ₹40 crore advertises fixed deposits to the public.

Analysis: It is not an eligible company under the ₹100 crore net-worth / ₹500 crore turnover test and cannot use section 76.

9. Repayment reserve used as overdraft security

A company creates the 20% reserve but gives the bank a lien for working-capital borrowing.

Analysis: The account must remain separate and usable only for deposit repayment. A lien defeats the ring-fencing requirement.

10. Secured deposit with inadequate property

Deposits and interest total ₹30 crore, but the charged asset has registered-valuer market value of ₹18 crore.

Analysis: The issue is only partly secured. Documents must describe the unsecured portion accurately and the company must address the coverage deficiency.

11. DPT-3 omitted because there are no deposits

A company has only inter-corporate loans and director loans and concludes DPT-3 is not applicable.

Analysis: DPT-3 also reports specified transactions not considered deposits. The annual reporting requirement must be assessed even where deposit balance is nil.

12. Matured deposit deliberately withheld

Management has cash but delays repayment to pressure depositors into renewal.

Analysis: The depositor can seek Tribunal relief; 18% penal interest, section 76A consequences and potential fraud exposure may apply depending on intent.

Exam and implementation traps

Common errors

Assuming every loan is outside the deposit definition.
Applying the director exclusion without the own-funds declaration.
Using the director-relative exclusion for a public company.
Missing the 60-day allotment and 15-day refund deadlines.
Treating an old unadjusted customer advance as permanently excluded.
Applying the private-company no-cap relief to a subsidiary or defaulting borrower.
Inviting public deposits through a non-eligible public company.
Using an expired DPT-1 circular.
Calling a partly secured deposit fully secured.
Using the deposit repayment reserve as general cash or collateral.
Skipping DPT-3 because the company has no legal deposits.
Using the historical DPT-3 one-time-return option every year.
Applying the omitted deposit-insurance rule.
Ignoring the 18% penal-interest rule on overdue deposits.
Failing to distinguish Chapter V from RBI, Nidhi and BUDS Act regimes.

Finin2min Q&A

Frequently asked questions

1. What is the first question for any receipt?

Whether it is a deposit under the broad rule or falls completely within a documented Rule 2(1)(c) exclusion.

2. Can every public company accept public deposits?

No. Only an eligible public company meeting the prescribed net-worth or turnover test may use section 76.

3. What is an eligible company?

A public company with net worth of at least ₹100 crore or turnover of at least ₹500 crore and the prescribed member approval.

4. What is the ordinary member-deposit limit?

Generally 35% of paid-up capital, free reserves and securities premium, subject to company-category reliefs.

5. Is company deposit insurance currently required?

No. The statutory clause and Rule 5 were omitted from 15 August 2018.

6. When is DPT-3 due?

Generally by 30 June for information as at 31 March, using the current MCA form.

7. What is the current repayment-reserve requirement?

At least 20% of deposits maturing during the following financial year, deposited by 30 April and kept ring-fenced.

8. Can a director give borrowed money to the company under the director exclusion?

No. The prescribed declaration requires the money not to be sourced from borrowing or accepting loans.

9. What is the current interest ceiling?

The Rules link the ceiling to RBI's NBFC public-deposit rate; RBI currently states 12.5% per annum.

10. Does a non-deposit exclusion eliminate all disclosure?

No. DPT-3, Board-report or financial-statement disclosures may still apply.

Primary-source register

Sources used

India Code - Companies Act, 2013Primary or authoritative source.Open source ↗

India Code - Companies (Acceptance of Deposits) Amendment Rules, 2022Primary or authoritative source.Open source ↗

India Code - Companies (Acceptance of Deposits) Amendment Rules, 2020Primary or authoritative source.Open source ↗

India Code - Companies (Acceptance of Deposits) Amendment Rules, 2019Primary or authoritative source.Open source ↗

India Code - Companies (Acceptance of Deposits) Amendment Rules, 2016Primary or authoritative source.Open source ↗

RBI - NBFC public-deposit directions / 12.5% ceilingPrimary or authoritative source.Open source ↗

India Code - Banning of Unregulated Deposit Schemes Act, 2019Primary or authoritative source.Open source ↗

Review date: 26 June 2026. India Code's amendment trail and the 2022 Gazette notification were checked for later MCA Deposit Rules changes; no later notified amendment was identified.

Source and review trail

Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.

Primary category: Companies Act & MCA
Official starting point: www.mca.gov.in