# Rule 3 — Terms & Conditions for Acceptance of Deposits

Rule 3 of the Companies (Acceptance of Deposits) Rules, 2014 lays down the operational guard-rails that apply equally to deposits from members (Sec 73) and public (Sec 76).

## 1. Tenure of Deposit [Rule 3(1)(a)]

Minimum tenure: 6 months from date of acceptance.
Maximum tenure: 36 months from date of acceptance.

### Short-tenure deposits (less than 6 months) — permitted with conditions:

Minimum tenure: 3 months.
Maximum amount: 10% of (Paid-up Share Capital + Free Reserves + Securities Premium).

## 2. Joint Depositors [Rule 3(2)]

Deposits may be held jointly by up to 3 persons, with clauses such as:

'Jointly'
'Either or Survivor'
'First named or Survivor'
'Anyone or Survivor'

## 3. Ceiling Limits on Deposits [Rule 3(3), (4) & (5)]

Limits are expressed as a percentage of (PUSC + Free Reserves + Securities Premium).

Type of Company	From Members	From Public
Eligible Company	10%	25%
Other public company (non-Eligible)	35%	—
Private Company (general rule)	100%	—
Specified IFSC Public Company	100%	—
Government Eligible Company	35%	35%

### Private companies with NO ceiling cap (limits notified by CG instead of 100%)

Private companies that are:

1. Start-ups — for 10 years from incorporation; OR

2. Companies satisfying all three:

(i) Not an associate or subsidiary of any other company;

(ii) Borrowings < [2 × PUSC] or ₹50 crore, whichever is lower;

(iii) No subsisting default.

## 4. Rate of Interest and Brokerage [Rule 3(6)]

The company shall not pay interest/brokerage exceeding the maximum rate prescribed by RBI for NBFCs on their public deposits.

## 5. No Alteration of Terms [Rule 3(7)]

Once the circular/advertisement is issued and deposits accepted, the company cannot alter any term of the deposit, trust deed or insurance contract to the prejudice or disadvantage of the depositor.

## 6. Credit Rating [Rule 3(8)]

Every Eligible Company must obtain a credit rating at least once a year.
The rating must be sent to the Registrar along with the return of deposits in Form DPT-3.
The rating shall not be below the minimum investment grade specified for fixed deposits, from an approved credit rating agency.

Worked example

### Example 1

Example 1 — Maximum short-tenure deposit

A private company has PUSC ₹10 cr, Free Reserves ₹4 cr, Securities Premium ₹1 cr (total ₹15 cr). What is the maximum amount it can accept as a 4-month (short-tenure) deposit?

Solution: Cap is 10% of (PUSC+FR+SP) = 10% × ₹15 cr = ₹1.5 crore. Tenure of 4 months is between the 3-month floor and 6-month ceiling — permitted.

### Example 2

Example 2 — Ceiling for an Eligible Company

PQR Ltd. (Eligible Company) has PUSC+FR+SP of ₹200 cr. What are the ceilings on deposits from members and public?

Solution:

From members: 10% × ₹200 cr = ₹20 cr.
From public: 25% × ₹200 cr = ₹50 cr.

### Example 3

Example 3 — Joint Depositors

Mrs. A wants to invest in a deposit jointly with her husband, son, and daughter (4 persons). Is this permitted?

Solution: No — Rule 3(2) caps joint holders at 3 persons. Only any three of them may be joint depositors.

⚠️ Common exam mistakes

Forgetting that the 6-month minimum tenure can be reduced to 3 months — but only with the 10% (PUSC+FR+SP) monetary cap.
Treating the ceiling base as paid-up capital alone — it is PUSC + Free Reserves + Securities Premium.
Mixing up the ceilings: Eligible Company = 10% members / 25% public; Other public = 35% (members only, since it cannot take from public).
Believing all private companies have a 100% cap — start-ups and the 'three-condition' private companies have CG-notified limits instead.
Assuming the credit-rating obligation falls on every company — it applies only to Eligible Companies.

Bare-Act text Rule 3 · Companies (Acceptance of Deposits) Rules, 2014 · click to expand

Rule 3, Companies (Acceptance of Deposits) Rules, 2014 — Terms and conditions of acceptance of deposits by companies.

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Terms & Conditions of Acceptance of Deposits — Tenure, Joint Holders, Ceiling Limits, Interest, Credit Rating (Rule 3)

Worked example

⚠️ Common exam mistakes