Section 2(31) of the Companies Act defines deposit as under
‘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.
As per Rule 2(c) of Rules made under Chapter V, deposit does not include
(i) any amount received from the Central Government or a State Government, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government or any amount received from a local authority, or any amount received from a statutory authority constituted under an Act of parliament or a state legislature;
(ii) any amount received from foreign Governments, foreign/ international banks, multilateral financial institutions (including, but not limited to, International Finance Corporation, Asian Development Bank, Commonwealth Development Corporation and International Bank for Industrial and Financial Reconstruction), foreign government owned development 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, 1999 and rules and regulations made there under;
(iii) any amount received as a loan or facility from any banking company or from the State Bank of India or any of its subsidiary banks or from a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949 (10 of 1949), or a corresponding new bank as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (5 of 1970), or from a co-operative bank as defined in clause (b-ii) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934);
(iv) any amount received as a loan or financial assistance from Public Financial Institutions notified by the Central Government in this behalf in consultation with the Reserve Bank of India, regional financial institutions, Insurance Companies, Scheduled Banks as defined in the Reserve Bank of India Act, 1934;
(v) any amount received against issue of commercial paper or any other instrument issued in accordance with the guidelines or notification issued by the Reserve Bank of India;
(vi) any amount received by a company from any other company;
(vii) any amount received and held pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities, including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment of the securities applied for. If the securities for which application money or advance for such securities was received cannot be allotted within 60 days from the date of receipt of the application money or advance for such securities and such application money or advance is not refunded to the subscribers within 15 days from the date of completion of sixty days, such amount shall be treated as a deposit under these rules. For the purpose of this rule any adjustment of the amount for any other purpose will not be treated as refund;
(viii) any amount received from a person who, at the time of the receipt of the amount, was a director of the company. The director from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others;
(ix) any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company or bonds / debentures compulsorily convertible into shares of the company within five years. If such bonds or debentures are secured by the charge of any assets referred to in Schedule III of the Act excluding intangible assets, the amount of such bonds or debentures shall not exceed the market value of such assets as assessed by a registered valuer;
(x) any amount received from an employee not exceeding his annual salary, under a contract of employment with the company in the nature of non-interest bearing security deposit;
(xi) any non-interest bearing amount received or held in trust;
(xii) any amount received in the course of or for the purposes of the business of the company:
(a) as an advance for the 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 three hundred and sixty five days from acceptance of such advance. In case of any advance
which is subject matter of any legal proceedings before any court of law, the said time limit of three hundred and sixty five days shall not apply.
(b) as advance, accounted for in any manner whatsoever,received in connection with consideration for property under an agreement or arrangement, provided that such advance is adjusted against the property in accordance with the terms of agreement or
arrangement.
(c) as security deposit for the performance of the contract for supply of goods or provision of services.
(d) as advance received under long term projects or for supply of capital goods except those covered under item (b) above.
If the amount received under (a) (b) and (d) above becomes refundable (with or without interest) because the company accepting the money does not have necessary permission or approval to deal in the goods or properties or services for which the money is taken, the amount received shall be deemed to be a Deposit under these rules
(xiii) any amount brought in by the promoters of the company by way of unsecured loan in pursuance of the stipulation of any lending financial institution or a bank subject to fulfillment of the following conditions:-
(a) the loan is brought in pursuance of the stipulation imposed by the lending institutions on the promoters to contribute such finance; and
(b) the loan is provided by the promoters themselves or by their relatives or by both; and
(c) the exemption under this sub-clause shall be available only till the loans of financial institution or bank are repaid and not thereafter.
(xiv) any amount accepted by a Nidhi Company in accordance with the rules made under Section 406 of the Act.
For the purposes of this clause, any amount.-
(a) received by the company, whether in the form of instalments or otherwise, from a person with promise or offer to give returns, in cash or in kind, on completion of the period specified in the promise or offer, or earlier, accounted for in any manner whatsoever, or
(b) any additional contributions, over and above the amount under item (a) above, made by the company as part of such promise or offer, shall be treated as a deposit.As per Rule 2(1)(d) under Chapter XV
‘Depositor’ means-
(i) any member of the company who has made a deposit with the company in accordance with sub-section (2) of section 73 of the Act, or
(ii) any person who has made a deposit with a public company in accordance with section 76 of the Act.
Section 73(1) states that, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under Chapter V.
Except
- a banking company
- non- banking financial company as defined in the Reserve Bank of India Act, 1934; and
- to such other company as the Central Government may,
after consultation with the Reserve Bank of India, specify in this behalf
Section 73(2) states that a company may, subject to
(i) the passing of a resolution in general meeting; and
(ii) 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, 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;
(c) depositing such sum which shall not be less than fifteen per cent. of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;
(d) providing such deposit insurance in such manner and to such extent as may be prescribed;
(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
(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.
Section 73(3) states that 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.
Section 73(4) states that when a company fails to repay the deposit or part thereof or any interest thereon under subsection (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 nonpayment and for such other orders as the Tribunal may deem fit.
Rule 3 under Chapter V states that on and from the commencement of these rules,—
- No company under sub-section (2) of section 73 and no eligible company shall accept or renew any deposit,
whether secured or unsecured, which is repayable on demand or upon receiving a notice, within a period of less than six months or more than thirty-six months from the date of acceptance or renewal of such deposit: - Exceptions
- A company may, for the purpose of meeting any of its shortterm requirements of funds, accept or renew such deposits for repayment earlier than six months from the date of deposit or renewal, as the case may be, subject to the condition that-
(a) such deposits shall not exceed ten per cent of the aggregate of the paid up share capital and free reserves of the company, and
(b) such deposits are repayable not earlier than three months from the date of such deposit or renewal thereof
Conclusion
1. Company may accept deposit from its members by passing a resolution in general meeting and subject to conditions as may be prescribed in the Rules.
2. Public companies may accept deposits, if it has a net worth of not less than one hundred crore rupees or a turnover of not less than five hundred crore rupees and which has obtained the prior consent of the company in general meeting by means of a special resolution and also filed the said resolution with the Registrar of Companies .
3. No company shall issue a circular or advertisement inviting secured deposits unless the company has appointed one or more deposit trustees for creating security for the deposits.
DPT 3 – Details of Borrowings and deposits
On 22nd January 2019, the MCA (Ministry of Corporate Affairs) rolled out a new rule in the Companies (Acceptance of Deposits), Rules, 2014 which is DPT-3 form.It is required to be filed annually by 30 June.
“Every company other than Government company shall file a onetime return of outstanding receipt of money or loan by a company but not considered as deposits, in terms of clause (c) of sub-rule 1 of rule 2 from the 01st April, 2014 to 31st March, 2019, as specified in Form DPT-3 within “ninety days from 31st March, 2019” along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 which currently is Rs 600/-.
The particulars to be furnished are CIN of the company, Email ID, Objects of the company, Net worth of the company, particulars of charge if any, the total amount outstanding as on 31st March, particulars of credit rating.etc. Draft form is attached herewith.
In case of NIL return, it is always beneficial to take the conservative approach and file a NIL return.
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