Section 2(31) of Companies Act, 2013 provides that Deposit includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include-

1. Any amount received from central or state government

2. Any amount received from Foreign Government/ Foreign Bank/ Foreign Company

3. Any amount received as a loan from any Banking Company/Insurance Company/ Schedule Bank.

4. Any amount received against issue of Commercial Paper/ Subscription to any Securities/ Issue of Bonds or Debentures

5. Any amount received by a company from any other company

6. Any amount received from the director of the company and in case of private company also from the relative of the director of the

7. Any amount received from an employee of the company not exceeding his annual salary

8. Any amount received as advance for the supply of goods/ Services

9. Any amount brought from the promoters or nidhi’s companies

10. Any amount received through public offer

Section 73 of CA, 2013 prohibits every company from inviting, accepting or renewing deposits from public except the Specified Public Companies.

Specified Public Companies

Companies fulfilling following conditions:

  • Public companies having a net worth of Rs.100 crore or more;
  • Public companies having turnover of Rs.500 crore or more

However, Companies accept the Deposits from its members subject to the conditions specified under CA, 2013

Deposits from its members by Public Company:

A Public Company can accept the deposits from its members if it fulfils the following conditions:

  • Obtaining the approval of Shareholders in General Meeting through Ordinary Resolution
  • Issuance of circular for inviting deposits to all its members in Form DPT-1 by registered post after delivering the copy of circular to ROC atleast 30 days prior to the date of issue of circular to
  • No deposits which are repayable on demand shall be accepted or
  • No deposits which are repayable on notice within a period of 6 months or more than 36 months shall be accepted or
  • A company may accept deposits repayable earlier than 6 months but not earlier than 3 months, to meet its short-term fund requirements provided that such deposits doesn’t exceeds 10% of the paid-up share capital, free reserves and securities premium account of the
  • If the deposit to be accepted from its members along with other deposits, outstanding on the date of acceptance or renewal exceeds 35% of the aggregate of its paid-up share capital, free reserves and securities premium account of the company, then such company shall not accept such
  • No deposit shall be invited or renewed wherein the rate of interest or brokerage fee exceeds the maximum rate of interest or brokerage prescribed by the RBI for acceptance of deposits by NBFCs.
  • Every Company having outstanding deposits shall deposit atleast 20% of the amount of its deposits maturing during the following financial year, on or before 30th April of each year and such amount shall be kept in a separate bank account to be called deposit repayment reserve account.
  • Every Company inviting deposits must certify that the Company has not defaulted in the repayment of deposit or interest in the past and if default had occurred then the default was made good and 5 years had lapsed from the date of making the default
  • Every Company Shall execute a Deposit Trust Deed in Form DPT-2 at least 7 days before issuing the circular
  • Every Company shall maintain a Deposit Register at its registered office and made entries within 7 days from the date of issuance of
  • Every Company shall file return of such accepted deposits with ROC in Form DPT-3.

Deposit Trust Deed

  • No company shall issue a circular or advertisement inviting secured deposits unless the company has appointed one or more trustees for depositors for creating security for the deposits.
  • Written consent shall be obtained from the trustee for depositors before their appointment and a statement shall appear in the circular or circular in the form of advertisement with reasonable prominence to the effect that the trustees for depositors have given their consent to the company to be so appointed
  • The company shall execute a deposit trust deed in Form DPT-2 at least seven days before

 issuing the circular or circular in the form of advertisement.

Following persons/companies in the business of providing trusteeship services shall not be appointed as a trustee for the depositors, if the proposed trustee

  • is a director, key managerial personnel or any other officer or an employee of the company or of its holding, subsidiary or associate company or a depositor in the company
  • is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding company
  • has any material pecuniary relationship with the company
  • has entered into any guarantee arrangement in respect of principal debts secured by the deposits or interest thereon
  • any person related to above

The trustee for depositors shall call a meeting of all the depositors on-

  • Requisition in writing signed by at least one-tenth of the depositors in value for the time being outstanding;
  • The happening of any event, which constitutes a default or which, in the opinion of the trustee for depositors, affects the interest of the depositors


  • Every company inviting secured deposits shall provide for security by way of a charge on assets of the company for the due repayment of the amount of deposit and interest thereon
  • Deposits which are secured by the charge on the assets, the amount of such deposits and the interest payable thereon shall not exceed the market value of such assets as assessed by a registered valuer
  • Valuation of stocks, shares, debentures, securities etc. shall be conducted by an independent merchant banker who is registered with the Securities and  Exchange  Board  of  India or  an independent chartered accountant in practice having a minimum experience of ten
  • The security (not being in the nature of a pledge) for deposits shall be created in favour of a trustee for the depositors

Above article has been written on the basis of rules and sections stated that time.

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One Comment

  1. rajesh shirsat says:

    Sir can you share your views on
    If suppose the subsidiary company having share holding of 99.99% of parent and 0.01% shares held by director as nominee on behalf of Parent company. While preparing consolidated balance sheet 0.01% is to be consider as minority holder or we should prepare balance sheet as 100% shareholding of Parent in subsidiary.

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February 2024