Rule 1Short title and commencement
- Companies (Acceptance of Deposits) Rules, 2014.
- Effective from 1 April 2014.
Finin2minCompanies Act Rules Master Series 04
Acceptance of Deposits,
Excluded Receipts and Repayment Controls
A professional rulebook covering the deposit boundary, Rule 2 exclusions, member and public routes, limits, DPT-1 to DPT-4, security, trustees, repayment reserve, registers, defaults and cross-regulatory controls.
22 Rule Entries
Rules 1-21 including 16A
Rules 1-21 including 16A
24 Exclusions
Each condition must remain satisfied
Each condition must remain satisfied
20% Reserve
By 30 April for next-FY maturities
By 30 April for next-FY maturities
18% Penal Interest
On overdue matured deposits
On overdue matured deposits
Executive architecture
Deposit compliance is a continuous classification system
Classify
Start with the broad definition. Prove the source, purpose, legal form, declaration and deadline for any exclusion.
Authorise and protect
Use the correct member/public route, DPT-1, limits, rating, security, trustee and repayment reserve.
Report and repay
Issue receipts, maintain register, file DPT-3, monitor maturity and respond immediately to default.
Central risk: an initially excluded receipt can become a deposit when a deadline, purpose or condition fails.
Decision map
Deposit classification and compliance lifecycle
Act gateway
Sections 73-76A - statutory working map
| Section | Subject | Professional control |
|---|---|---|
| 73 | Prohibition on public deposits and member-deposit route | Member resolution, circular, repayment reserve, no-default condition, Tribunal remedy and prescribed rules. |
| 74 | Pre-Act deposits | Repayment/filing transition and Tribunal-extension route. |
| 75 | Fraudulent acceptance | Unlimited personal liability for officers responsible for fraudulent pre-Act deposit non-repayment, in addition to section 447. |
| 76 | Public deposits by eligible companies | Eligible-company thresholds, rating, security and compliance with section 73 safeguards. |
| 76A | Punishment | Repayment plus serious company/officer penalties for contravention or non-repayment. |
Rule 2 classification
Receipts not treated as deposits - only while every condition is met
| Receipt category | Exclusion | Evidence / failure risk |
|---|---|---|
| Government and statutory sources | Central/State Government, local or statutory authority, or Government-guaranteed repayment. | Sanction, source and guarantee evidence. |
| Foreign sources under FEMA | Specified foreign governments, banks, multilateral institutions, foreign DFIs, collaborators and bodies corporate, subject to FEMA. | FEMA route and purpose evidence. |
| Banks and co-operative banks | Loans/facilities from banking companies, SBI, specified institutions and co-operative banks. | Lender's regulatory status. |
| Public financial institutions | Notified PFI, regional FI, insurance company or scheduled bank. | Legal status on receipt date. |
| Inter-corporate money | Amount received from another company. | LLP/firm/individual is not automatically covered. |
| Securities subscription money | Share/stock/bond/debenture application money allotted within 60 days or refunded in the following 15 days. | Date-wise allotment/refund tracker. |
| Director funds | Money from director with written own-funds declaration. | Declaration plus Board-report disclosure. |
| Director relative - private company | Money from relative of director of a private company with declaration. | Private-company status and disclosure. |
| Secured or compulsorily convertible instruments | Eligible secured bonds/debentures and compulsorily convertible instruments within ten years. | Real security or binding conversion terms. |
| Listed unsecured NCD | Unsecured NCD listed on recognised exchange under SEBI rules. | Listing and security identification. |
| Employee security deposit | Non-interest-bearing amount not above annual salary under employment contract. | Employment agreement and salary limit. |
| Money held in trust | Non-interest-bearing amount genuinely held in trust. | Trust instrument and separate accounting. |
| Goods/services advance | Business advance adjusted within 365 days, subject to legal-proceedings exception. | Contract and adjustment ageing. |
| Immovable-property advance | Advance under property agreement adjusted according to agreement. | Executed agreement and adjustment trail. |
| Performance security | Security deposit for performance of goods/services contract. | Commercial linkage and duration. |
| Capital-goods project advance | Advance under long-term capital-goods supply project. | Project contract and milestones. |
| Warranty/maintenance advance | Advance for services within normal business practice or five years, whichever less. | Service period and industry practice. |
| Regulator-permitted advance | Advance permitted by sector regulator or Government direction. | Exact authority and permission. |
| Publication subscription | Advance for print/electronic publication adjusted against supply. | Subscriber and publication trail. |
| Promoter contribution loan | Unsecured promoter loan stipulated by lending institution, only while institutional loan remains outstanding. | Lender stipulation and facility status. |
| Nidhi receipt | Money accepted by a Nidhi under Nidhi framework. | Member status and Nidhi Rules. |
| Chit subscription | Subscription under Chit Funds Act arrangement. | Registration and chit records. |
| Startup convertible note | At least Rs. 25 lakh in one tranche; convertible or repayable within ten years by eligible startup. | Startup status, amount and note terms. |
| SEBI-regulated pooled investors | Money from AIF, venture capital fund, InvIT, REIT or SEBI mutual fund. | Registration and investor identity. |
Accounting labels do not decide the law: "loan", "advance", "security deposit", "application money" and "convertible note" must each satisfy the exact Rule 2 conditions.
Quantitative controls
Deposit limits and core deadlines
| Test | Working rule |
|---|---|
| Ordinary member deposits | Up to 35% of paid-up capital + free reserves + securities premium. |
| Private / specified IFSC member route | Generally up to 100%; qualifying startup or independent private-company relief may remove percentage cap. |
| Eligible public company - members | Up to 10% of capital base. |
| Eligible public company - public | Up to 25% of capital base. |
| Eligible Government company | Prescribed 35% aggregate route. |
| Ordinary tenure | At least 6 months and not more than 36 months. |
| Short-term route | 3 to under 6 months within 10% sub-limit for short-term needs. |
| DPT-1 filing | At least 30 days before issue. |
| Deposit receipt | Within 21 days. |
| Repayment reserve | 20% of next-FY maturities by 30 April. |
| DPT-3 | Generally by 30 June for position at 31 March. |
Interest control: Rule 3 links the interest/brokerage ceiling to RBI directions. A working reference is 12.5% per annum; verify the current RBI direction on the acceptance date.
Current operative register
Companies (Acceptance of Deposits) Rules
Rule 2Definitions and deposit exclusions
- Deposit is broad and includes money received by loan, deposit or other form unless a complete exclusion applies.
- Twenty-four operational exclusion categories require source, purpose, documentation and continuing-condition evidence.
- Eligible company generally means prescribed public company meeting net worth/turnover criteria and member approval requirements.
Rule 3Terms and conditions of acceptance
- Ordinary tenure: 6 to 36 months.
- Short-term deposits: 3 to under 6 months for short-term needs within 10% sub-limit.
- Ordinary member-deposit ceiling: 35% of paid-up capital, free reserves and securities premium.
- Specified private/IFSC routes may use 100% or no-cap relief when every condition is met.
- Eligible public company: 10% from members and 25% from public; eligible Government company uses prescribed 35% route.
- Interest and brokerage cannot exceed RBI-linked ceiling; eligible companies maintain annual investment-grade rating.
Rule 4Circular or advertisement in DPT-1
- Member deposits use circular; public deposits use circular in advertisement form.
- File signed DPT-1 with Registrar at least 30 days before issue.
- Public advertisement in English and vernacular newspapers and on website.
- Majority of directors sign; include financial, default, security, rating and management information.
- Auditor confirms no default or cured default of at least five years.
- Validity ends six months after FY close or date financial statements are laid, whichever earlier.
Rule 5Omitted deposit-insurance rule
- Omitted from 15 August 2018.
- Deposit insurance is not a current Chapter V condition.
Rule 6Creation of security
- Charge over suitable tangible assets sufficient for principal and interest.
- Registered valuer assesses security value; secured amount cannot exceed market value.
- Charge created in favour of depositors through trustee and registered under charge provisions.
- Partly secured or unsecured deposit clearly described as unsecured.
Rule 7Appointment of deposit trustees
- Appoint before issue of circular/advertisement and obtain written consent.
- Execute DPT-2 within prescribed pre-issue period.
- Directors, KMP, employees, relatives, indebted/guaranteeing/materially interested persons are disqualified.
- Removal after issue requires prescribed director/depositor consent.
Rule 8Duties of deposit trustees
- Check asset cover, limits, circular/trust-deed consistency and security creation.
- Monitor covenants, defaults and repayment reserve.
- Protect depositors and act when security or repayment is threatened.
Rule 9Meeting of depositors
- Trustee calls meeting on request of depositors holding at least one-tenth in value.
- Meeting also called when event affects depositor interests.
Rule 10Application form
- Applicant declares money is not deposited from borrowed funds.
- Capture applicant and joint-holder particulars.
Rule 11Nomination
- Section 72 nomination framework applies to deposits.
Rule 12Deposit receipt
- Issue within 21 days of receipt, realisation or renewal.
- State depositor, amount, rate, date, duration, maturity and repayment terms.
- Authorised officer signs.
Rule 13Deposit repayment reserve
- By 30 April, place at least 20% of deposits maturing in following FY in separate scheduled-bank account.
- Balance must not fall below required 20%.
- Use only for repayment of deposits.
Rule 14Register of deposits
- Maintain at registered office with depositor, nomination, amount, receipt, interest, maturity, repayment and security particulars.
- Authenticate entries and preserve at least eight years from FY of latest entry.
Rule 15Premature repayment
- On depositor-requested repayment after six months but before maturity, reduce interest by one percentage point from rate applicable to period actually run.
- Company-initiated early repayment and renewal follow specific terms.
Rule 16Annual return in DPT-3
- File by 30 June for information as at 31 March.
- Covers deposits and/or specified non-deposit transactions.
- 2022 form includes statutory auditor declaration.
- Government-company treatment follows the operative form/rule scope.
Rule 16AFinancial-statement disclosure and historical one-time return
- Disclose director money and, for private company, director-relative money in notes.
- 2019 one-time DPT-3 return was historical; annual DPT-3 continues.
Rule 17Penal interest
- Overdue matured deposits attract 18% annual penal interest for overdue period.
Rule 18Power to exempt
- Central Government may exempt classes only through actual notification and conditions.
Rule 19Old deposits
- Pre-Act deposits may follow transitional terms where statutory conditions are met.
- Renewal triggers current Act and Rules.
Rule 20DPT-4 legacy statement
- Legacy commencement statement for pre-Act deposits and repayment arrangements.
- Not the annual DPT-3 return.
Rule 21Punishment for rule contravention
- Rule-level penalty applies where Act has no specific punishment.
- Sections 74, 75 and 76A can create more serious exposure.
Member versus public deposit route
Invitation and ongoing compliance matrix
| Control | Member deposit | Eligible-company public deposit |
|---|---|---|
| Company eligibility | Company-category and Rule 3 member limit/relief | Eligible public company under section 76 and Rules |
| Member approval | General-meeting resolution | Prescribed eligible-company resolution route |
| DPT-1 | Circular to members | Circular in form of advertisement |
| Publicity | Restricted to members | English/vernacular newspapers and website |
| Rating | Not the ordinary member-route requirement | Annual investment-grade credit rating |
| Trustee/security | Applies for secured structure where used | Trustee, security and charge controls central to secured public route |
| Reserve, receipt, register, DPT-3 | Applicable | Applicable |
Liquidity and repayment
Protection continues until final repayment
DPT-1 controls
What the circular or advertisement must prove
Company and management
- Business and management details
- Financial position and profits
- Existing deposits and defaults
- Directors' interests
Deposit terms
- Amount, tenure and rate
- Purpose and utilisation
- Security and asset cover
- Trustee and rating
Investor protection
- Repayment and interest
- Premature repayment
- Nomination
- Complaint and default information
Validity control: DPT-1 is not perpetual. A company accepting fresh money after expiry must renew and refile the circular.
Security and trustee
When "secured deposit" is legally supportable
| Control | Requirement | Evidence |
|---|---|---|
| Asset eligibility | Suitable tangible assets | Title, encumbrance search and asset schedule |
| Coverage | Market value sufficient for principal and interest | Registered-valuer report |
| Trustee | Independent trustee appointed before invitation | Consent and eligibility declaration |
| Trust deed | DPT-2 in prescribed pre-issue period | Executed/stamped deed |
| Charge | Registered in favour of depositors through trustee | CHG filing and certificate |
| Disclosure | Partly secured/unsecured clearly identified | DPT-1, receipt and register consistency |
DPT-3 reporting
Annual return is broader than legal deposits
- Report position as at 31 March by the operative 30 June deadline.
- Select the correct purpose: deposits, non-deposit transactions, or both.
- Reconcile ledger, related-party balances, director/company loans, share application money, advances and closing maturity data.
- Obtain the current statutory-auditor declaration and preserve working papers.
- Do not repeat the historical 2019 one-time purpose every year.
Example: A company has no legal deposits but has director loans and inter-corporate borrowings. Those receipts may be excluded from the deposit definition yet remain reportable in annual DPT-3.
Cross-law boundary
Companies Act compliance is not deposit-taking permission
| Framework | Separate question |
|---|---|
| RBI / NBFC directions | Is the entity permitted to accept public deposits and what interest/maturity/rating conditions apply? |
| Nidhi Rules | Is the receipt a member deposit within the Nidhi-specific framework? |
| Banning of Unregulated Deposit Schemes Act | Is the arrangement a regulated scheme or an unregulated deposit scheme? |
| FEMA | Is foreign-source money permitted and on what terms? |
| Tax/TDS | Interest accrual, withholding and depositor reporting. |
| State depositor-protection law | Additional attachment, prosecution or depositor remedies. |
Forms and evidence
Primary document chain
| Form/evidence | Purpose | Control |
|---|---|---|
| DPT-1 | Circular / advertisement inviting deposits | File 30 days before issue; renew on expiry |
| DPT-2 | Deposit trust deed | Independent trustee and security terms |
| DPT-3 | Annual return of deposits and/or non-deposit transactions | 31 March data; auditor declaration |
| DPT-4 | Legacy commencement statement | Do not confuse with annual DPT-3 |
| CHG-1 | Charge securing deposits | Coordinate with DPT-2 and valuation |
| MGT-14 | Resolution filing where applicable | Test company-specific filing rules |
| NCLT-1 | Repayment/extension application | Sections 73(4) and 74(2) routes |
| Deposit receipt | Individual acknowledgement | Issue within 21 days |
| Deposit register | Depositor and repayment record | Registered office; preserve 8 years |
| Rating letter | Annual eligible-company rating | Investment-grade and renewal tracking |
| Valuation report | Security coverage | Registered valuer |
| Bank confirmation | Repayment reserve | 20% by 30 April and no diversion |
Practical cases
Fourteen classification and compliance scenarios
1. Day-76 share application: No allotment and no refund. The exclusion has failed and the receipt is treated as a deposit.
2. Customer advance at 400 days: Without the legal-proceedings exception, the stale advance is exposed as a deposit.
3. Director declaration missing: Accounting entry as "director loan" is insufficient.
4. Director's relative lends to public company: The private-company-relative exclusion is unavailable.
5. Promoter contribution after bank loan repayment: The exclusion can cease when the institutional facility is repaid.
6. Startup note Rs. 20 lakh: Below the Rs. 25 lakh one-tranche threshold and not excluded by that clause.
7. Private-company no-cap relief: Subsidiary status, borrowing threshold and default history must be checked before applying relief.
8. DPT-1 expired: Fresh acceptance after expiry requires renewed circular and filing.
9. Partly secured deposit: It must be described as unsecured to the extent required by the Rule.
10. Repayment reserve pledged: Ring-fenced reserve cannot support working-capital borrowing.
11. No legal deposits: Annual DPT-3 may still report non-deposit receipts.
12. Matured deposit unpaid: 18% penal interest applies in addition to repayment and statutory exposure.
13. Early closure after 10 months: Apply the rate for the actual run period less one percentage point.
14. Deposit trustee is finance director: Trustee is conflicted and ineligible.
Audit and secretarial checklist
Year-end and pre-invitation evidence pack
Classification file
- Receipt-by-receipt Rule 2 matrix
- Source and counterparty status
- Declarations, agreements and approvals
- Allotment/refund/adjustment ageing
- FEMA/RBI/Nidhi/BUDS analysis
Deposit file
- Resolution and DPT-1
- Rating, trustee, DPT-2 and charge
- Receipts and deposit register
- 20% bank confirmation
- DPT-3 and auditor working papers
- Maturity/default tracker
Immediate red flags
| Red flag | Risk |
|---|---|
| Every loan assumed excluded | Deposit definition is broad; exclusion must be proved. |
| Private-company relief used by subsidiary/defaulting borrower | No-cap route conditions may fail. |
| Omitted Rule 5 treated as current | Deposit insurance is no longer a Chapter V condition. |
| Reserve balance diverted | Violates ring-fencing and threatens repayment. |
| One-time DPT-3 purpose used annually | Wrong filing purpose and data classification. |
Finin2min Q&A
Quick answers
Is every director loan excluded?
No. The director must provide the required own-funds declaration and disclosure conditions must be met.
No. The director must provide the required own-funds declaration and disclosure conditions must be met.
Does no-cap private-company relief remove DPT-3?
No. It affects the quantitative limit, not every other safeguard or reporting rule.
No. It affects the quantitative limit, not every other safeguard or reporting rule.
When is the repayment reserve funded?
On or before 30 April at 20% of deposits maturing in the following financial year.
On or before 30 April at 20% of deposits maturing in the following financial year.