Acceptance of Deposits from Members [Section 73]

# Acceptance of Deposits from Members [Section 73]

## 1. Conditions Prior to Acceptance

• Pass an Ordinary Resolution in general meeting.
• Cap on quantum of deposits (including outstanding):
• Public company: Up to 35% of paid-up share capital + free reserves + securities premium
• Private company: Up to 100% of paid-up share capital + free reserves + securities premium

### Exception — No Cap on the Following Private Companies

(i) Start-up — for 10 years from incorporation, OR

(ii) A private company that fulfils ALL three of:

• Not an associate / subsidiary of any other company,
• Borrowings (bank/FI/body corporate) < lower of twice paid-up capital OR ₹50 crores,
• No subsisting default in repayment of borrowings

## 2. Circular (Form DPT-1)

Company must issue circular by registered post AOD / speed post / electronic mode to members, containing:

• Financial position, credit rating, no. of depositors, amount due
• Statutory auditor's certificate of no default (or that 5 years have lapsed since default was made good)

Filing: Copy of circular to ROC within 30 days before issue.

Validity of circular — till earlier of:

• 6 months from closure of FY of issue, OR
• Date of laying FS in AGM (or last date by which AGM should have been held)

Fresh circular needed after expiry.

## 3. Deposit Repayment Reserve

• By 30 April of FY, deposit at least 20% of deposits maturing during FY in a separate scheduled bank account.
• Use only for deposit repayment — no other purpose.

## 4. Exemption from Circular & DRR

Not applicable to private company which:

(i) Accepts ≤ 100% of (paid-up capital + free reserves + securities premium) from members, OR

(ii) Start-up — for 5 years from incorporation, OR

(iii) Satisfies all of: not associate/subsidiary; borrowings < lower of ₹50 cr or twice paid-up; no subsisting default.

Such company must still file Form DPT-3 with ROC.

## 5. Trustees for Depositors (Secured Deposits)

• Trustee required when deposits are secured.
• Written consent before appointment.
• Disqualifications: Director/KMP/officer/employee of CASH or relatives; depositor or his relative; indebted to CASH; guarantor of principal/interest; material pecuniary relationship.
• Deposit Trust Deed (Form DPT-2) executed at least 7 days before issuing circular.
• Trustee calls meeting on:
• Written request by ≥ 1/10th depositors in value, OR
• Default or event affecting depositors' interest
• Removal: Only with consent of all directors present at Board meeting (and at least 1 ID if applicable).

## 6. Application & Joint Holding

• Depositor's application + declaration that money is not borrowed.
• Nomination permitted at any time.
• Joint deposits — up to 3 persons with clauses 'Jointly', 'Either or Survivor', 'Anyone or Survivor', 'First named or Survivor'.
• Interest rate / brokerage cannot exceed RBI's NBFC cap.
• Brokerage only to persons authorised in writing through whom deposits are actually procured.

## 7. Secured / Unsecured

• If deposit not fully secured — termed 'unsecured deposit' and must be disclosed in every circular, form, advertisement, document.

## 8. Tenure

• Minimum 6 months — Maximum 36 months
• Exception (short-term): May accept for 3 to 6 months if amount ≤ 10% of paid-up share capital + free reserves + securities premium.

## 9. Premature Repayment

• After 6 months but before maturity — interest reduced by 1% for period actually run.
• No reduction if premature repayment is to:

(i) Bring deposits within limit, or

(ii) Pay personnel of naval/military/air forces during emergency.

• Part year < 6 months → ignored; part year ≥ 6 months → taken as 1 year.

## 10. Renewal

• If renewed before maturity for a period longer than unexpired period, company pays the higher interest rate.

## 11. Deposit Receipt & Returns

• Deposit Receipt within 21 days of receipt of money — signed by authorised officer.
• Form DPT-3 — audited annual return as on 31 March, filed by 30 June with auditor's declaration.

## 12. Register of Deposits

• Maintained at registered office.
• Entries within 7 days of receipt; authenticated by director / CS / authorised officer.
• Preserved for at least 8 years from FY of last entry.

## 13. Disclosure in FS

• Public Co.: discloses money received from directors.
• Private Co.: discloses money received from directors/relatives.

## 14. Repayment & Penal Interest

• Failure to repay → depositor may apply to NCLT, which can order repayment + damages.
• Penal interest on overdue claimed deposits — 18% p.a.